Arcade Controls Quick Walkthrough

The basic idea behind the arcade controller (at least the ones I'm explaining) is to take a normal gamepad's circuit board and wire arcade quality buttons and joystick to it. The whole mess is then housed into a nice box.
So basically, you've got a box, a gamepad, and some arcade controls. These and the other stuff you'll need are all easy to get.
Note there really is no order which these steps need to be done (except the first). Since most people will have to order their arcade parts they will do everything they can except install those while they wait for the parts to arrive.

Step 1: Prepare your work area
I can't stress this enough. And I don't want to sound like your mommy but safety needs to come first through this whole project. If you don't prepare for what your doing you could end up messing up a part, burn out a circuit board, drill or saw your hand, burn something or yourself and so on.
So have an orginized and clear area. Most of this will require a large flat surface. Make sure it's well lit as well. Basically use some common sense. This project will take roughly ten hours to complete. Most gamers arn't used to being hunched over a circuit board with smoke in their face for long periods of time. Take breaks once in awhile, especially if you find yourself frustrated or tired at any point.

Build the Box
Unless you luck out and have a nice box of some kind to use already you'll have to build a box. This is typically made of fiberboard. The box also needs some sort of opening for any future maintenance or upgrades. All of the box designs I have here have clamshell style of lid.

Finish the Box
I don't mean finish where you left off, I mean put a nice finish on the surface of some kind. You don't want it to look like that forever do you?
This step is done either before or after you actually build the box depending on the kind of finish you want to do.
Personally I prefer using Con-Tact Paper. It's cheap, easy and creates little mess. But perhaps you'd like a painted or stained finish. Many people like putting artwork under some plexi. It's all up to you.

Wire the PCB
This is commonly refered to as a "gamepad hack". This is where we take the gamepad apart and wire it up to do our bidding. Almost any gamepad will work. On the left menu I have a selection of those which I have used with everything figured out for you. All you need to do is solder wires where I show you.
Basic electronics knowledge doesn't hurt here but is not required.
Do Not do any wiring or soldering while the controller is plugged in!! This is extremely important! While plugged there is electricity going through it. Getting electrocuted is nothing you need to fear but many parts can not handle much power and if a wire ends up where it shouldn't be then you may be kissing your board goodbye.
Anytime your done soldering anything make sure no little balls of metal are laying where they shouldn't be. Also keep an eye out for screws, pieces of wire, anything metal. Something laying on the board can ruin it or worse, damage your console.
If your new to soldering you may want to pay a visit to Steve's Soldering 101.

Controls Installation
Put the buttons in the holes and mount your joystick(s).
Once that's done you need to connect the wires from the circuit board to the arcade controls. How that's done can very depending on the gamepad you used. Typically you'll have one Ground (a.k.a. Negative) wire connecting all of the button's Grounds together. Then each switch also has a Positive or "hot" line connecting to the various points on the circuit board. When a switch is turned on it closes the circuit between the Ground and that function's Positive, thus causing Ryu to kick Guile in the face.

Finalizing
All the things you don't think much about till you realize you've got more work to do. Most of this can be done along the way.
Hinges need to be put on the lid. Exposed connections need electrical tape over them. The circuit board needs to be mounted in place. Rubber feet? How about Memory Cards? You'll probably want soem foam or rubber padding between the lid and base of the box. Maybe you could use Velcro instead?
Yeah that kind of stuff. It's not as fun but you still have to do it.

Test
Last thing to do is test that sucka out. There's always a good chance a button won't work, or your Left and Right will be swapped or whatever. So here's some tips for when things go wrong:

A button or direction of the joystick doesn't respond: This is common and tend to be a bad connection between the wire connecting that switch to the board.

Many or all controls fail to respond: Most likely your Ground line has a bad connection somewhere. If some controls work follow the Ground line from the first control that does work back to the board till you find something wrong.

A button or direction acts like it's held down: There's a "short" in that control's circuit. Basically two things are touching each other that shouldn't be. Commonly this is at the board (make sure the wire there is Only touching the point it needs to be soldered to and nothing more), or at the switch.

A button doesn't respond until it is pressed and then released: This can happen with the DC Dream Master pad and possibly others. Make sure the analog triggers are completely off or disabled.

Really wierd stuff/I smell smoke: Unplug it! If you got crazy shit happening as if a 2 year old wired your board then odds are something is layign on the board. Study that thing for any pieces of wire or solder laying on there, particularly around any microchips.