I think most of the questions, like wiring can be answered by looking at the phoenix tutorial: http://www.lynxmotion.com/images/html/build159.htm
You may also want to look at the H3/H3R tutorial: http://www.lynxmotion.com/images/html/build99c.htm
From your post I assume you have the PS2 version of the phoenix code and you have hooked up your ps2 controller to pins 12-15 and the PS2 controller is not working and you are getting the beeps from the program saying it can not properly configure the PS2 into analog mode. Things to check include:
1) PS2 plugged into the correct pins.
2) Is this a Lynxmotion PS2? If not which Ps2?
3) Is the power pin that the PS2 connected to properly configured for +5v and not VS.
If everything else looks correct and it still does not work, search the forum, there are many threads talking about PS2 issues.