I keep trying to examine something. I am pressing the correct control button "Y" but all that happens is black box pops up and makes a comment from Jack. I can't seem to look inside the backpack or anything. Am I doing something wrong, can't seem to move forward without examining the back pack. Any help will be appreciated.

what joypad are you using?

If you go to the control panel, you have the option to check what game controllers you have connected, is the device being detected there?