[Ether]

Look at the datasheet for the tolerance specs on symmetry and quadrature delay for this encoder. These also affect the max speed the FPGA can handle.

Using 4X decoding with no sampling is likely to be very noisy, given the above-mentioned tolerances on symmetry and quadrature.

Free play between the encoder shaft and whatever it engages can exacerbate the noise, especially if using 4X decoding with no sampling.