ROTARY ENCODER

This info may help with the interface.

The Panasonic EVQB encoder is a 2-phase mechanical encoder with a push-to-close SPST switch, and is similar to this one.

One output is stable at detent and the other is not reliable at detent.
The "A" output changes midway between detents.
When A changes (+ debounce 5 ms), read state of A and B

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Channel A and B outputs are 90degrees out of phase.
Channel A changes state 1/2way between detents
Channel B changes state very close to the detent so it is not reliably H or L at detent!

Use interrupt when Channel A changes state
> Read both channels state after a 5 ms debounce:
The level of Channel B relative to Channel A state determines direction:
* Channel A = H:
Channel B = L >>> CW, else CCW.
* Channel A = L:
Channel B = H >>> CW, else CCW
------------------------------
If A=0
If B=1 then CW
Else CCW
ENDIF
ElseIf A=1
If B=1 then CCW
Else CW
ENDIF

2-bit grey code can sometimes be a challenge to debounce in a circuit, I found this chip worked well with this rotary encoder:
http://www.picstuff.com/index.php?route=product/product&path=37_41&product_id=56

These are typical 2-bit Grey, or quadrature, encoders. The outer pins are data, the middle either power or ground. Of the three I got, one only reliably works in one direction, generally sending signals that I am unable to decode when turning in the other. For all of them, with the click of each detent, even with hardware (0.1u caps) and minimal software debouncing, 3-4 changes are detected, all in the same direction. When wiggled, without crossing a detent, a change is sometimes detected when using software debouncing, but usually not.

My debouncing code is based on this: http://www.circuitsathome.com/mcu/reading-rotary-encoder-on-arduino

Solder tabs are on 0.1" centers, easy to solder to headers for breadboarding. The tabs are fairly flimsy, but are fine when connected to headers.