[nathan_hui]

Is this happening all the time, or is this a one off occurrence?

If it's one-off, I kind of suspect the encoder was sitting on a rising/falling edge.

IF you have an oscilloscope, I would suggest probing the A and B channels to make sure you're getting a clean signal. Probe it from the DSC connectors, that way you simultaneously check your pinout and wiring (you can never be too sure). My thought right now (but it doesn't exactly fit with the problem description) is that one of the channels is continuously low or high instead of oscillating like it should, so the count only oscillates.