Attacking in that game requires use of the Super Scope. Barring that, I think there was a code you could enter to allow mouse support but I can't remember it...
Watching a video, Pinocchio doesn't initially attack. When you play as the cricket Jiminy he can attack. Later on Pinocchio gets donkey ears, and only then do I see the person attacking in the video as donkey Pinocchio. Maybe you have to have that? Are you a proper jackass Ack?
Back to the game though, the level I'm talking about is actually the first with Pinocchio as a donkey. I got through the Jiminy Cricket level just fine. The funny thing is, the controls listed in the Options Menu seem to correspond to him, and he's only in one level as far as I can tell.
Well, I figured it out. From what I can tell, the game requires I grab a particular item on the first level that is missable to enable me to attack. Once I had that, I blew through the rest of the game almost without issue.