Does the calibration behave differently with the joystick unplugged? If it behaves the same, it could be because the joystick port isn't enabled. Maybe you can find a test/debug program that can show you exactly what inputs are coming in from the port, so you can see if the values change as you move the stick. That would at least let you confirm the hardware is all configured correctly.

I had similar problems with a number of DOS games when using the gameport from a SoundBlaster Pro. I actually had to install a separate ISA-gameport just to get the flightstick to work. I never figured out why it wouldn't work as my SB+MIDI were the only expansion cards installed and I checked the jumpers many times. I knew for a fact that the gameport worked previously, so it had to be some unknown conflict with SB and the mainboard.

Sounds like a speed issue. Your bog standard gameport interface, like those found on the Sound Blaster Pro and earlier cards, do not have any ability to adjust for fast processors. Essentially the CPU reads the joystick adapter faster than the game intended and the adapter cannot keep up. You can use a later sound card, which typically has some speed compensation ability, a game card with a speed adjust knob or find a way to slow down your system.

There is a way to read the joystick interface that is not CPU speed dependent but this will not give quite as smooth a reading from the analog sticks.

I think that I have used this joystick in this PC in the past to play X-WIng, but I could be wrong. If I try to test the joystick plugged into the gameport in Windows 98 in the game controllers Control Panel, none of the buttons even respond. If it was a speed issue, I'm not sure if that would affect Windows.