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Well, found the solution. For some reason, the .ASI that comes with this package was deleted from my GTAV folder. I didn't notice this, since I use mod manager. Reloaded and worked. Make sure the .ASI is there.
As you guys, I've been updating this page for days, looking for an update, while the problem was something else.

Thanks for fixing the walking for second player. Works great now. Had a nice fun walking around and driving with gf!
Sorry to hear others are having troubles. What I simple do is turn on my two wireless xbox joysticks, and second player will use my second joystick. Nice. Looking forward to more progress!

EDIT: Also, I've got a suggestion. Could be possible to add a 'look ahead' feature? This would be to look ahead when driving. Programmatically, would be like If the angles of the two vehicles is similar, move the camera towards that angle, by a cars velocity bias. Another thing that could work is detecting direction and velocity of camera. If is going fast in a certain direction, players are probably driving, if so, multiply the velocity by 1.5 or so so camera would look ahead. Wish I can try this myself!

I'm a game dev and quickly looked up the source code. Seems like the problem is on the GetDirection(float X, float Y, float xCenter, float yCenter) function. Ideally, you'd like to check for two axes X and Y, if X is negative, send Left, if is positive, send Right, and same for Y. If you press down to the left, multiple conditions do happen and this is probably why the character moves in circles. THAT or the values you are getting is a fixed number that from 0 to something (and that's wrong).

Also, I don't humble think that split screen is posible, not at least, with some uber-hacks. Is the same reason why working mirrors aren't created yet. You have to render everything again, regardless of what textures you've got in memory, and R* engine isn't made for that. I hope to be wrong, but if it would be that easy, R* must have done it for PC and nope.

Looking forward to seeing more progress on this mod! :)

I had the issue with same joystick controlling both characters, and the driver didn't seem to fix that. What I did was connecting a second joystick, then reload the script (by doing CTRL + INSERT). Then, I made the mod use the second joystick.

Is a very promising mod. Driving and shooting together is perfectly fine. For walking, a new camera mode is needed. Perhaps @benjamin94 can check the GTA:SA two player mod? That was super fun and made by rockstar. Could be a nice inspiration that works.

solved it, it was a problem on my end. I used emulation for my wheel, which hooks xinput1_3.dll. If someone uses x360ce, it conflicts with this mod and must be removed.

THANKS FOR YOU AWESOME WORK, PLS DONATE TO THIS GUY NAO.

@benjamin94 I restarted my machine. Still same problem. I tried swapping my wireless joystick for my wire one, they are perfectly recognized on the UI, but still won't let me configure them or toggle the mod. I will keep trying hard :)

I've got a Xbox360 wireless for PC controller, doesn't let me toggle the mod. Says is not configured. I want to configure the joystick, but DPAD, analogs and triggers are not recognized. Installed the driver and update.

Same error:
[ERROR] Caught fatal unhandled exception:
System.MissingMethodException: Method not found: 'Boolean GTA.Camera.op_Equality(GTA.Camera, GTA.Camera)'.

@abstractmode use the .CS version, is open source (use any text editor and open it yourself).

@Baaa - What LUA are you using? The SDK one or the "Normal" (as listed on the author's page) one? I am using the normal one. On latest Steam version, with latest ScriptHookV. This .lua mod wasn't working for me (the rest did), but installed the redist 2013 and worked. I sense some sort of conflict in your setup.