Since the third players buttons are currently not being used I swapped out the player three punch button + switch with the player one button + switch. Shockingly... the issue still exists even with a different switch / button.
I find it hard to believe both buttons would have the same exact fail...
I also find it hard to believe it's the wiring since the buttons and switches appear to be functioning other than the extra crap going on more noticeably in certain games.
Also, is it possible to manually wire my other joystick and buttons onto the J-pac? I see it has switches on it but I am still learning here, so please bare with me and help me out.