Apart from any other problems that you may have I didn't bother to look beyond the fact that the code you posted has two setup() and loop() functions in it so I assume that it is not actually the code that you are using.
If there are no interrupts then the value of enc0 should not be changing. How is the connection to the interrupt pin wired ? It is not, perhaps floating and not tied to either 5V or ground, is it ?
It compiles for me using IDE 1.0.4 I copied it from the link you gave. It is 58 lines long including the block comments at the top. Are you sure that you copied all of it ?
I assume that you do have the pgmspace.h file. Which version of the IDE are you using ?
That does not make any sense. What you have done is to tell the Serial monitor to append a Carriage Return to the text sent to the Arduino, but the code that you posted does not rely on the CR being present.
You are not using interrupts in the code you posted. What do the sweep() and cw() functions do ? I would bet that they use the delay() function. Am I correct ? Please post the whole program.
The principle will work for as many servos as the receiving device can support but whichever method you use bear in mind that the calls to the function will happen in a sequence and not all at the same time. It is up to the receiving device to interpret and act on the commands appropriately.