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To the left of the Xbox Home button there should be a switch marked "LS DP RS" which stands for left stick, d-pad, and right stick respectively. If it is all the way to the left then the arcade stick is set to act as the left analog stick. If it is in the middle then the arcade stick is set to act as the d-pad. All the way to the right... you get the idea.
Just slide the switch to the appropriate position.
Other than that I don't know why POV_UP wouldn't work for up... The only thing I can think of is if your stick is toggled to something else then "LS." Maybe it is set to the D-Pad? Or vice versa.
I don't think I can offer you much more help outside of that.