I am attempting to use my Arduino like a joystick, but I'm not sure how you can place it like a joystick. I know that is reading through data from Arduino with Python and replicating the joystick. How do i implement an online joystick using Python? Can there be one other way?

Which flavor Arduino?

First, you'll need an Uno model, see: http://arduino.cc/blog/2010/09/24/dinner-is-ready/

We changed the maturing FTDI chipset having a customized usb-serial ripper tools constructed with an Atmel ATmega8U2 this gives lower latency and doesn’t require to set up any motorists on mac and linux (on home windows you just need an easy .inf file) more complex customers will have the ability to reprogram the USB nick to create the board appear as a number of USB products (Keyboards, Rodents, Joysticks, MIDI etc)

Older models could only appear as serial ports (with the FTDI chipset).

Next, there's articles which shows how you can emulate a joystick around the Uno (you will have to sign in on the Arduino forums to determine the good examples). See: http://arduino.cc/blog/2010/10/24/arduino-uno-as-joystick/

Note: you'll have to replace the Arduino firmware.