Spindle Encoder Issues

Hello, I am trying to configure my 3 axis mill to use a spindle encoder so I can try rigid tapping. 
I am using this encoder, www.amazon.co.uk/gp/product/B07T2S9HHS/r...00_s00?ie=UTF8&psc=1 
Its a line driver styled encoder, phases A and B seem to work well, Z phase isn't readable on my oscilloscope but "seems" to be functioning okay on the mill, as I am able to read a position and velocity from the encoder in the halui. 
I have set the encoder up using PNCCONF wizard, as a 1024 pulse encoder, I haven't included any PID values at this point.
Is there any documentation / tutorials on installing a spindle encoder? I have attempted to wathch talla83's video about the subject but left more confused. 

I have attached my hal and ini files from my test PNNCONF setup. I was planning on getting the encoder setup to work then transferring the parts into my main hal and ini files for the machine. I was hoping someone could point me in the right direction for this. I am unable to do G33.1 commands (motor not in correct mode) and M19 R 0 commands do nothing. 

Any help would be greatly appreciated as I have become mightily lost. 
Cheers! 
 

1. Does the encoder count up when the spindle is turning in the forwards direction?
2. Have you verified index operation?

To verify index operation, start LinuxCNC with the spindle drive
disabled (motor / VFD unplugged) then from a terminal window, type:

halmeter signal spindle-index-enable

halcmd -kf

Then at the halcmd prompt, set the index enable signal true:

halcmd: sets spindle-index-enable true

Then, while watching the state of spindle-index-enable in halmeter,
slowly rotate the spindle. spindle-index-enable should go false when
the index is detected. This should always happen at the same angular
position (hint: in halcmd, you can repeat the "sets" command by
typing an up-arrow and a return)

I tried verifying the index, when I run the halmeter signal spindle-index-enable command in a terminal with the vfd off, I get an error saying gtk_is_widget failed

I can run the command when the GUI is on and the power on button is pressed in the GUI, it then opens the halmeter and just says false.
I was unable to run halcmd -kf at any point.
Would photos help?
Thanks!

Okay sorry I just realised I needed a separate terminal to run the sets spindle-index-enable true command. The spindle does indeed go to false at the same point in the rotation, implying indexing is working?

Yes, that's the correct index enable behavior which means index is working
is the encoder counting it the correct direction?

When I set it up in the pnnconf it seemed to be, is there another command I can run to check?

When I view spindle-revs the number gets lower the more I turn the spindle in the cutting direction, I'm presuming this means it's reversed?

Yes, you need to change the sign of the encoder scale in the ini file

Brilliant, it's now going the correct way, what's the next step? Encoder seems to be working correctly! (Thank you greatly for the help)

That should be enough

Rigid tapping requires:

1. Spindle encoder working and in the correct direction
2. Spindle index working properly
3. Spindle forward and reverse controls working
4. Spindle-at-speed true at beginning of cycle
(I think spindle-at-speed was set true in your hal file)