you mean like use an actual steering wheel with ePSXe? Sure, why not.
but if you mean you want the game to think you have a steering wheel (intead of a dual-shock), then sorry, you can't. Bleem! 1.5b is the only emulator so far with such an option, which has some bugs too.
That can surely change when someone writes a pad plugin with that option, for the emulators that support it. unfortunately ePSXe does not support pad plugins as of 1.2.0.
well that question kinda moves into bleem! discussion, hehe
anyways you gotta select Controller type to NegCon, and then configure, see attachment.
notice I mapped L, I, and II to Z axis, which is my throttle. I have to MAX the throttle to make bleem think those buttons are not pressed. I think it's a bug.
I'm using an older model Logitech Formula Force Wheel for GT2 and removing any deadzone the wheel software adds (5% at minimum setting) with a little utility called DXTweak. Theres still the programed deadzone for the dualshock but it isnt as prominent and is still better than those crapy wheels you can get for the PSX (I know coz I used to have one)
Its actually a little program by the wingman team at logitech so I'd say it would'nt work with your Microsoft wheel. I don't know if a similar program exists for use with your wheel or if you can eliminate the deadzone with the provided MS software. You want no deadzone and high sensitivity to get a halfway decent feel.
I had one of the earlier wheels that was produced for the playstation, Madcatz. I thought it was actualy reasonably good until it broke. I then replaced it with a later model Madcatz and that one was pure crap. I hardly ever used it. None of the other wheels I tried seemed to be a marked improvement either.
I'm sure an expensive PSX wheel would perform well, but the majority are cheep and cheerful.