Ok, just wondering if the demo version of Mach may have something to do with it.
Yes, encoder pulses per rev are 4x the encoder line count and yes, that is the reason machines of that vintage had low count encoders.
Enc1 input is dedicated to the spindle encoder, the other ports are dedicated to DROs so you can use them for other purposes, for example I use the second channel on the Enc module for a glass scale on my tool height setter.
You might have the problem with the disable set up that way, in fact if I understand the way it is working then I am certain it wont work.
The CSMIO needs to slow the spindle to a stop and then find the Index, occasionally I saw my spindle do almost a full revolution after it had basically stopped.
Hood