I found a simple solution to getting my second controller to work.
i figured out something that might be the issue. The controller stuff seems to have to do with ‘focus’ - which is why alt-tabbing in and out works. since the game requires you to click the screen when testing in editor the focus is delayed.
Another way to give the game window focus immediately is the ‘Game Gets Mouse Control’ checkbox in the Level Editor Play settings in the Editor Preferences. Checking this box seems to give both players focus and the start and then both controllers work.