Thank you Radical, I forgot about the Speed Reference command (which tells the Jaguar to use the encoder).
As for wiring:
the order of pins on the Jaguar is this: + A B I -
The + and - are for encoder power; the A and B are actually the channels. Leave "I" unconnected. It is the index, and (according to the datasheet) will reset your position count. It may also affect your speed.