I've read that the only way to get windowed mode to work is to edit the Registry. I checked the path:
HKEY_LOCAL_MACHINE\SOFTWARE\Wow6432Node\LucasArts Entertainment Company LLC\Star Wars Starfighter\1.0\Renderers

And I made sure that both the DirectX and OpenGL versions had "DefaultWindowed" set to 1.

I set the resolution higher than 1024x768 in both renderers, since that default resolution is too small on this monitor. I made sure to use 4:3 ratio. But for some reason the resolution is still stuck at 1024x768. Is there a way to fix this?

I've also noticed that the rolling is reversed with an Xbox 360 controller. Is there a way to Flip the Z axis for the Roll?