I've used an XBOX controller for one and a half years now.. As Iron_Maiden does I just reduce the max steering lock to give me more precision in the central steering area while retaining full linear motion.. You actually only need a small steering lock to get around the race track (i.e. BLGP in the GTI I used 9.0 for awhile sucesfully), athough it can be a bit of a problem getting out of the pits or turning around if you spin
so I tend to use a steering lock which is 50-60% of the maximum steering lock for that car, on some tracks it might need to be slightly higher.. for example some of the South City tracks. All other settings are no different to a wheel setup.. it just takes practise to be smooth and precise
As for controller settings I retain a pure linear motion i.e. ensure there is NO dead spot/zone in center of stick movement, that analog steer smooth function is close to 0, steer center reduction is off, and the wheel turn compensation setting is 180.