I make do with a PS2 controller. When playing N64 games I set the C-buttons to the right controlstick. Not optimal but works ok for me, and of course, it works 100% when playing PSX games.
As for question 2, I've always hade that outline. Although it isn't listed as a known bug in the FAQ so you might get rid of it if you play around with another graphic plugin.
The only info I've found is a bit contradicting. It says the purple around the text is in the japanese version (Eltale Monsters) when using Jabo's plugin. On Quest 64 it reports a couple of other errors but not the one with the purple outline. You can read more here.


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