This was happening to me…right before my 360 capability went out in my SE. This was after a dual mod.
And yes, it was a faulty PCB. What I did was call Madcatz, and they actually offered to replace the PCB for me. When I told them I kind of needed my stick for a tournament, and asked, since I had already voided the warranty, if they could send me a PCB so that I could repair it myself, they did. Madcatz does stand behind these sticks.
Also, did you wire the Cthulhu to the PCB itself? What I noticed personally, and it may just be a coincidence, was that my PCB for the 360 worked fine up until I modded. Then when I wired the Cthulhu to the PCB, it started doing this. Then when I got my replacement board, I wired all the button inputs to the terminal strip, and all the joystick inputs to the contacts on my stick (I used a Seimitsu LS-32, without a PCB/harness, so that’s where the inputs on my 360 PCB also went to). The only thing that got soldered to the PCB was Home. I have not had a single problem with the PCB shorting out or dropping inputs since I did this.
I honestly wish Bomberman would modify his guide to direct people to solder to the terminal strips and to the joystick itself if at all possible. It’s not only easier to solder to those spots, but for me, it seemed to keep my board from shorting out.