[Jaine Perotti]

I would suggest reading the white paper "Interrupts for Dummies".

This will explain ALOT about how the code for encoders works -- specifically interrupts, which are probably the best way to count distance. (Also read the Quadrature Encoder white paper).

Here are some threads that may also help you with basic knowledge:

Choosing an Encoder for the Drive-Train

Optical Sensors Used as Encoders

Mechanical Wheel Encoders

Hope this helps!