Hi Kbird,
this picture is little confusing for users because SPI-MISO for shift registers is not the same MISO that you can use for TLE5011. I think this is your problem. So SCK is the same for TLE5011 and for 4021 but MISO for 4021 connect to another free digital pin at arduino and set it to MMJoy2. There are two items for shift registers: 1-CS and 2-DATA so both pins must be only for shift registers, DATA is MISO from your picture.

About the LED for indication, Sokol1 gave you advice about using switch with 2 rows of pins, he is right. You can use green LED for 1 position and red LED for other but do not forget resistors for limiting current.

Bye