Same issue. I am new to retropie and have a Pi3 on the latest version of retropie.
bluetooth firmware is updated.
If I connect the controller for the initial setup via a usb cable it reports “1 gamepad connected” holding down a button says “PS 3 controller detected” and starts setup.
I can start mapping the buttons but after a few seconds the controller stops responding.
If you are really quick you can get down to the “OK” but can’t select it.
Removing the usb cable and it will not work over bluetooth.