Can you spin it up, and look at the signals with an oscilloscope? Any misalignment should show up as a variation of the quadrature relationship. The A vs B signals will have to be moving in relationship to each other in order to get a dropped count.
It seems you're not entirely confident in the U.S. Digital encoder installation. I suppose that's why machine manufacturers generally use enclosed, industrial-duty encoders. There are numerous producers of quality enclosed encoders which include sturdy bearing supports, internal signal conditioning circuits and offer many mounting options. There are many other features such as dirt and liquid-tight seals, various output signal options etc.
By coupling a decent quality enclosed encoder to the mill spindle, you'd have essentially no concerns about disk alignment, runout or proper mounting of the individual components.
Having a few ruggedized encoders on hand, along with a good counter/tach DPM can be very handy for checking all sorts of machine functions (mentioned previously).
I didn't have any trouble finding an abundance of new surplus industrial encoders some years ago, for use with a few DRO displays I was working with. I wanted a couple to tear apart, and found quite a few used ones on eBay in the $5-$10 range. The majority of them will probably work well with just 5VDC, but many have fairly wide power input ranges of ~5-30 VDC.
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