Xbox 360 controller - cursor issue

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[Bonez]

This is a result of the way the 98 version of the game (which the current stable 7H uses) treats the name screen. You're supposed to actually type it on a keyboard. Even if you're using a keyboard WASD instead of a controller, it will disable WASD and turn into a regular keyboard for these screens. and the enter key (and therefore the "OK" button on controller in your case) goes to the "Select" option...

Basically, you can either use the keyboard or update to 7H canary which now uses the Steam version instead of the 98 conversion version (the Steam version doesn't have this keyboard "feature")

If you do update, the canary (and the next stable for that matter) requires a fresh install for the same reason -  we've switched to the Steam version.