I fixed my issue.
For anyone else who uses a Pi 3 or Retropie 3.6 here is how to make both gamepads be detected.
Go to sudo nano /boot/cmdline.txt.
Do exactly what DuckClimber says in his usbquirks post.
So, go to the end of the first line, hit the spacebar after the last word in the first line.
Paste this usbhid.quirks=0x16c0:0x05e1:0x040
Warning: Your usbid may be different.
Use lsusb to check.
From here if you already configured a gamepad (I did in my case so the config menu was not coming back up in emulationstation) delete this file.
This is the command exactly.
sudo rm /home/pi/.emulationstation/es_input.cfg
Reboot.
In the commandline type reboot
Now when you reboot you should have the configuration menu come up and two game pads should be detected.
If you ever need to check your joysticks, install this.
sudo apt-get install joystick
Then to test your joysticks, do this.
jstest /dev/input/js0
and
jstest /dev/input/js1
Results will be something like this.
Axes: 0: 0 1: 0: Buttons: 0:off 1:off 2:off 3:off 4:off 5:off 6:off 7:off