The dialogue box no longer appears after this update. I did use a work around yesterday by moving my Xbox controller from Controller ID#1 down to Controller ID#4, and moved my CH Combat Stick to Controller ID#1, Pro Throttle to ID#2 and VKB rudder pedals to ID#3 in Windows. That allowed me to log in without any issues but still had the image of the Xbox controller on the splash screen.
After this update, using JoyIDS Utility again to move my controllers to different Controller ID's, I moved the Xbox controller back up to Controller ID#1 and tried to see if the dialogue box would appear again after the update. It didn't, though the Xbox controller image still appears but goes away once I either move one of the thumb sticks on the game pad or press a button on the joystick.