First, make sure you have the latest GRID patch. Then open the actionMapPreset7.xml file which is located in the install directory under ActionMap. The standard path on a 32bit XP machine is:
On a 64bit XP machine it is:
C:\Program Files (x86)\Codemasters\GRID\ActionMap\actionMapPreset7.xml
You need to replace every occurrence of
Logitech RumblePad 2 USBwith
Logitech Cordless RumblePad 2 USB
Now when you go into the game controls the default preset should say Logitech Cordless RumblePad 2 at the top. You will also now be able to control the game menus from the pad. If you have trouble try creating a new game profile.