I tried Xenoblade Chronicles on Dolphin last night. Can't make it playable with a Logitech Dual Action Gamepad or Mouse/Keyboard. The controller works, but it's a clusterf**k no matter what configurations I tried. No clue how people manage to use Dolphin without a WiiMote/Sensor bar.
I did it months ago. Make sure the game is set to classic controller and there should be no problems at all. Unfortunately the game has framerate problems in some of the larger battles.