*Right Click Fallout 3
*Click Manage
*Click Browse local files
*Find Fallout3Launcher.exe and rename Fallout3launcher1.exe
*Find Fallout3.exe and rename Fallout3Launcher.exe
*Close Folder Window
*Launch Fallout 3

And that is it not only will this fix the issue of not being able to use a controller for the game but it will also allow steam to log how many hours you are playing and enable you to access Steam overlays and use screenshots.

I am posting this here so that if anyone else has the problem like i had they can fix the issue instead of accidently finding a solution.

I hope his works for you like it has for me.