I double checked and the retrostone audio jack connector is connected correctly. So I see no reason you can't use earphones with mic.
It's as on this diagram top left :
L/R/GND/MIC
MIC is unconnected as it's not used. Maybe it should be connected to ground too. But not sure why.
From this picture
I see that some earphones have reversed standard L/R/MIC/GND. So maybe your earphones are like these.
If so soldering the unused pin to ground will solve the problem.
It is most strange that you have different behaviour between emulation station menu and ingame as the selection of speaker/earphones has nothing to do with the processor. It's mechanical inside the jack connector. When the headphone is inserted it opens a circuit preventing sound from going to speaker.
The layout
Headphone sound only on left channel
Re: Headphone sound only on left channel
If you have earphones that are non standard and want to use them anyway there is a small fix that you can do :
Connect the unused pin (see yellow rectangle on below picture) to ground. Note the copper plane next to the pin is ground, so you can just scratch it a little bit and solder the pin to the surounding plane.
Thus you will connect the unused mic pin to ground. So reverse mic earphones will also work.
Connect the unused pin (see yellow rectangle on below picture) to ground. Note the copper plane next to the pin is ground, so you can just scratch it a little bit and solder the pin to the surounding plane.
Thus you will connect the unused mic pin to ground. So reverse mic earphones will also work.