If you don't have detents, then you would get 96 positions in a full turn of the knob. With detents, it would nominally take 5.3 turns to cover 128 positions if one detent equals one position. But if you were turning the knob fast, it could shift into counting one detent as two positions, or three, or five, or 20, or whatever.
If you use an incremental encoder, the position of the knob would no longer have any direct connection to where you are, and if you want to know the current setting you would have to display it. If that isn't good for what you need to accomplish, then an absolute encoder might work, or it might be best to just use a pot.