Forget about fiddling with xpad and whatnot. Since October 2017 or somewhere around that time, the 360 wireless controller works out of the box with OSMC. No need to install or configure anything, if you just want to control Kodi/OSMC with it.
Almost the same for RetrOSMC, which is a full RetroPie installation since a couple of versions as well. Install OSMC, run mcobit’s install script for, launch RetrOSMC for the first time and go through the controller mapping dialogue that pops up if you start it for the first time.
The LED ring flashing is a minor nuisance, yeah, just don’t constantly look at it. It’ll be fixed with Kodi 18 anyway, and that will include RetroPlayer which will eliminate the need for using mcobit’s install script.