Hi, Rick
Your encoder sounds like a standard 1 puls one, "I think" The short pules is there whether its low pulsing high or high pulsing low + - , The same way as changing Active low with an X or Check Mark in Mach.
In the Diag., Select the C1 for range and Var. R1 for Delay Time adjust.
Are you running in 45 Khz kernel mode ?, Should help Mach to see your pulses.
Whats your Computer speed ?
More Info, Chip