The highlighted options should allow you to use buttons as throttle and brake (and clutch). Not sure how you could assign them to actual axes, but an app called PPJoy might help with that.
With a PS3 controller you can only use the analog sticks as analog controls.
The buttons and the triggers are detected as digital by the PC.
At least this is the case with an official PS3 controller but i would imagine any other PS3 controller would be the same.
A 360 controller works but the unofficial ones are crap and i personally don't think a genuine one is worth it.
I race LFS with a ps3 controller using the analog sticks. It means that throttle and brake are on the same axis but it gives me more control than with a mouse.
*edit*
Actually with new drivers it may be possible but i have only read rumours havent found any yet.
sil3ntwar i spent months looking for decent PS3 controller drivers and found motioninjoy drivers, works with bluetooth or usb cable and you can map all the buttons how you want including the analogue triggers and depending on you set them up they can be seperate or combined heres a link to the guys main page http://www.motioninjoy.com/
Enjoy it drove me nuts searching for them and setting it up so if you need any help getting it working give me a yell and ill try to help