a keywiz PCB was used.. but didnt work.
I suspect you need to start at the beginning. Follow the tutorial for ReadDigitalSerial (http://arduino.cc/en/Tutorial/DigitalReadSerial) to get 1 button working. Then add 2, 3, etc. Don't immediately try doing all 16 at once.
There's also debouncing, which is probably important for an arcade system. Well, I'm assuming arcade, because the MAME I know about is the Multi Aracade Machine Emulator. Really cool thing for playing Galaga on my Linux box.