Some of the wires in your VIs are overlapping or hidden, so it's difficult to be sure where they are connected...
What happens if you switch 4x decoding to 1x?
You lose direction sensitivity, but it only counts one edge of one channel, instead of both, so it may be able to keep up better.
Do you know the CPR (counts per revolution) of your S4 encoders? I believe the standard options are 100 and 360.
Can you post a plot of your encoder rate over time? Also make sure there is no load on the gearbox so it can spin freely to ensure a constant speed.
Edit: Thanks for the note, Joe, good to know. Note Joe's
later post for more about 1x vs. 4x.