Thanks for all of the replies!
I have looked at a few of the options presented here, and decided to try to use an Absolute encoder, coupled to a PIC and PCB which will illuminate the LED's. Alternatively, I was thinking about using a cheap SBC which I can write the code for as well.
This is in theory, for I have no idea how to burn PIC chips, and make them work on a PCB. I am willing to learn though!
Ultimately, it needs to be cheap. And the Absolute encoder runs about 30.00, plus any costs for the PIC & PCB & any other parts that go on it.
With regards to the "end-usage", I am trying to solve a problem with a robot we are building which will be used in police engagements. The robot is based off the MGAe Tarantula chassis, which has four "tank style" treads. The front and rear axles rotate in a 360o rotation thus rotating the two front or rear tank treads; in addition to the treads moving in a forward/reverse direction.
This vehicle is operated in a first person view, and the positioning of the rear "legs" or "treads" cannot be seen visually. I need a cheap solution to notify the driver of the leg positions.
This is the encoder I plan on using (with a gear on the shaft):
http://www.usdigital.com/products/ma2/
Since it outputs both PWM and Analog voltage, I was thinking I could program the PIC chip to "apply power" to a specific LED when the voltage or PWM is in a specific range (which is mapped to the 360o orientation of the legs).
Again, in theory. Would someone mind offering further assistance with the PIC setup? Or if you have another solution (cheaper, very reliable, compact, easy to implement); I would love to hear it.
Thanks again!
Mike