It is usually best to simply use the USB connection for laptops, setup guide here

PS/2 Connection (not recommended): The X-Arcade™ will not work in the PS/2 keyboard port unless a keyboard is plugged into the back of the X-Arcade™. You need to boot the laptop up with the X-Arcade™ already plugged in and set to MODE 1 (switch on back closest to the serial connection), and with a PS/2 keyboard plugged into the back of the X-Arcade™.

Older models only: 

If you have an older PS/2 only X-Arcade™ you may want to consider upgrading your with our X-Arcade USB Upgrade Kit.

NOTE: The only USB adapter that will work properly with the X-Arcade™ is the one that was made for it, a standard PS/2-USB will not work

Older models that have Joy1 mapped to Numpad keys rather than arrow keys (you check this in our test program) will want to make sure NUMLOCK is ON (otherwise Joy1 will act as arrow keys instead of NUMPAD numbers). To turn NumLock on with a laptop, usually you will find a blue colored "Fn" key that must be held while pressing another key labeled "Num Lk". Refer to your laptop's manual for more help with this.