My application needs to behave as a virtual joystick (imagine dragging a square with the mouse and translating that to the output of an analog joystick) and send some keystrokes
First of all you will have to have some kind of interface between your computer (or the network) and the joystick device that is being controlled.
If it involves making custom hardware to control the analog joystick (like it controls pneumatics or hydraulics or something, not just a pc game joystick type thing), then yes, you will almost certainly need a driver to allow a network app to move (the robot arm, or whatever) will move that joystick.
If you are able to remove the physical joystick from the equation, maybe you can write software that emulates the input of wherever the joystick used to plug into (a joystick/serial port?), or emulates it completely (a reasonably simple driver could do this). You could do it completely without writing a driver if the joystick used a standard communication interface (like RS232) because libraries exist that will handle all that and you can set up virtual COM ports that will be indistinguishable to whatever you are trying to communicate with.
The best book you can buy on driver development at the moment is Developing Drivers with the Windows Driver Foundation
Rootkits: Subverting the Windows Kernel is another great book, but doesn't cover a lot of the newer WDF stuff. It has more of a security focus but has a few awesome chapters on device drivers with fully spoonfed examples, breaking it down in a really accessible way.