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I am running the emulator on a Phenom III with a GTX260

When I enable vsync, the framerate stays steady, but I get some weird input lag. If I had to guess I'd say somewhere between 400ms and 500ms lag.

I am using the GSdx 1611 and Lilypad 0.10.

You don't need to enable vsync to limit the FPS. Just go to Config->CPU and select 'Limit' instead of 'Normal'

I know that. I am using vsync because of screen tearing.

Hm well not sure if it can be avoided...try checking or unchecking 'Use GS thread' in lilypad's config and see if that helps any. Don't know what else you could try

No luck. Still laggy.

vsync in gsdx is known to give slowdowns, but never heard of input delays.

I actually have the same problem in FFX, but only in certain areas... it's a little odd. I just disabled V-sync. I'm usually far enough away from the monitor (and my eyesight is poor enough from that distance) that the tearing doesn't bother me too much.