[Alan Anderson]

In LabVIEW at least, the Distance output of the Encoder Get vi changes in increments of one-quarter of the distance per count. You're getting all the resolution possible.

For tuning, note that the LabVIEW PID function works with the "academic form" of PID. That means that the I and D numbers are actually time values, not gains. A larger value has a smaller/slower effect on the output.