Here are photos of erco's encoder installation. As he explained, he built it on a tiny piece of single-sided perfboard in a non-standard way as you can see in the photos. The board is a tight fit between two molded ribs in the top body shell. The encoder sensor is mounted in a raised position on the non-copper side so that it can stick through a mostly square hole in the case. All other components are mounted on the copper side so that he could flush-mount the non-copper side to the housing inside using a drop of hot melt glue. The Optical gap between encoder and wheel is ~0.150. erco aligned the sensors to read the outer rings of his encoder wheels, and mounted it horizontally from axle in the top body shell. Each encoder circuit has 3 wired connections: +5V, ground, and output. He disconnected photocells on the front of the Scribbler to use the encoders. Photocells are also mounted in the top body shell on a small green PC board under a black plastic light shield. Nothing was removed, erco just unsoldered the green wire from P4 on the circuit board to disconnect all 3 photocells. The green wire becomes the ground connection for both encoders. He connected the left encoder output to pad P3 and the right encoder output to pad P1 on green photocell PC board. Stamp-wise, the left encoder is IN2 and the right encoder is IN0. The +5V connection is taken from the 6-hole "Hacker Port" header on main PC board.
See erco's impressive video below. With the pattern on the floor, you can clearly see the Scribbler keep itself running straight and it returns almost perfectly to where it began.
Photos and video courtesy of erco.