I was sitting and thinking about this circuit and it occurred to me I have probably used the resistors wrong and if you look at my circuit diagram, am I correct in thinking this will never work because i am dropping most of the 5V over the resistors i put on the encoder outputs?
I have now googled what an open collector output is and now things are much more clear. I have looked at the encoder datasheet and Avago datasheet again and it looks like I need to change the wiring.
I probably need the weekend to re-configure and report back but here are some snippets from the datasheets:
Is this thread going to go dead because I am taking some time to debug the circuit?