Hi Kbird, I only recommend you use version [20160818upd1] but as I said button matrix must work at any version.

I looked at your scheme, sorry but it is not very transparent :-) so I redrew it without changes and I hope it is clearer now, maybe :-)
Here is your scheme:


Important thing is to set MMJoy2 correctly:


So connect your Arduino and click "Load sets from device". Then we start setting.
Step 1: set which pins you use for ROWS and COLUMNS
Step 2: click "Save sets to device" from now if you push any button you have to see red square with number 01-132 on the left side of MMJoy2 window (there is 01 in my picture because I pushed button connected between ROW1 and COL1 and press "PrintScreen" on keyboard)
Step 3: now you can set which H/W.Button will be displayed as button in Windows. Doesn`t matter if H/W.Button 01 will be Joystick button 05 or 25... It is up to you. But OS Windows knows only 32 buttons and 1 HAT so SUM=36 buttons.
Step 2: again send your settings to Arduino

Now you click on the left-down "Windows Joystics" and then "Properties" and must see this:


If you push the button 01 you have to see red square with number 01 on the left side of MMJoy2 window and red circle button 01 in joystick properties window.

That`s all :-) I hope you do it now.