Using this thread to both ask if anyone else has this problem as well as track progress on what I've learned.

Issue: I noticed that while playing Vectorman, sometimes I would press Up and the character starts moving left. I noticed problems with diagonal movement as well. I was having other issues with controllers not responding as well and tried 6 different controllers. So figured it was the system. I took apart my OEM 3 button with red markings and cleaned it thoroughly, contacts and everything. The issue with the D-pad still seems to persist. it really makes playing Genesis games unplayable especially the harder ones or games where there is diagonal aiming.

I poked and prodded my Genesis 3 VA1 and seems like I get good voltage. I get around 4.8 VDC at the controller pins (all except one which is at 0 which I assume is the ground.) Unfortunately I couldnt find any schematics for this particular model so not sure what I am even looking at. I did a search on the forum for this problem and someone mentioned cold solder joints which I assume means the joints are cracked.

Board and caps look fine for the most part. I started testing one of the ICs and I think a couple pins may be shorted. Really hard to say since my DMM is a cheapo POS that isnt very reliable.