I have downloaded the latest controller drivers from Microsoft and they do improve the controller in ArmA2 but the default assignments for the controller aren't intuitive.
I still think the game controls are over-complicated and the game is buggy and eratic to play.
As for the Vista OS not recognising the controller, I too have Vista (32bit Home version) and have no trouble recognising the controller as the MS Xbox controller when connected. Have you tried "adding hardware" in the Control Panel? Maybe the USB port is faulty, try it in a different USB port. Have you got anything else connected through your USB...a mouse...joystick etc.,?