Sending this response after you asked me on a Twitter/ X posting to respond here.

When starting the game I have been able with the latest update the first time gets the game to recognize an Xbox controller as Xbox and not playstation. I can go into a server but as soon as the server restarts or I'd leave and go into the menu it reverts to PlayStation showing icons for the wrong controller. I started Steam Steam more than once. Uninstalled and reinstalled the game and made sure to clear out the my documents folder of the game settings/profile to make sure it wasn't holding on to older settings. Completely reset up the game and it continues to happen.

I'm playing on a Windows 11 PC, Nvidia 5060 TI card, I even tried more than one Xbox controller.