Fihn:
I checked, I had 200k resistors not 20k. Will these work? 10k 1/4 Watt or would 1/2 Watt be better?
Even 200K should do, what resistors between 200K and 10K you have? Their value isn't that important for this purpose to be honest.
Fihn:
So the encoders should be read on digital inputs only so as to reduce the risk of missed pulses?
What he's talking about is "digitalRead" vs "analogRead", actual pin does not matter (you can't analogRead digital only pin). He might be right, but it's easy fix – just put regular switches instead of encoders.
Fihn:
When I see your diagram maybe it will make more sense but I still don't follow the M1-M6 matrix. Will the 6 different axis be using 7 input ports (1 common input and 6 using diodes) on the LEO with one common ground?
Ok, lets clear some things – all dashed lines will be outputs (8 "OUTPUT"s in the code).
All solid lines will be inputs (7 "INPUT"s in the code).
In Your hand drawing you've named all wires, name them in EasyEDA as well.
Now you have to add two more inputs (solid lines) to your matrix, one input will be digital input as other (for rotary encoders), second input should go to LEO analog input pin. After you will have 9 inputs (8 digital and 1 analog).
Look in my analog diagram – that 1 analog pin should be connected there.

M1 to M6 pins should be connected to your outputs (dashed lines), no matter what order, but don't connect same output to more than one "M" pin – they should be separate outputs.
PaulRB:
I don't know for sure if scanning the matrix will be fast enough to catch every encoder pulse or not. It will be interesting to find out. It's certainly more convenient to have them in the matrix.
Yes it is – Arduino samples matrix many times faster than pulse itself happens, I'm using this method in my matrix.