The bouncing drove me so crazy I had to strip the thing down.
First thing I saw was an unpopulated space for an MC14490.
I guessed wildly that this might have something to do with it as this chip is a "Hex Contact Bounce Eliminator".
They must have run out of stock when my gen. was made and someone had bodged things so the encoder output effectively went straight to the processor; no filtering at all. Nada!

Thanks all for the support.
