Mike, I used a potentiometer to get the resistance up due to the fact that I did not have a resistor handy, I was able to get the voltage close to 18V and the counter did not count up. Then I took the encoder off the machine and turned it slower and the input wasn't even changing with pot wired in. I can get the input to change when I move the wheel slowly.
Time to regroup.
Just take everything loose from C0, X0, X1, X2 and X3 on the bottom terminal strip.
Jumper C0 on bottom to OV on top and use a wire from 24V on top to X0 on the bottom to make X0 turn on and off.
Does the X0 LED work?
Do you see X0 turning on and off in a Data View?
Does CTA174 increase in value?
If not, switch C0 and X0 so C0 is 24VDC just in case one polarity of the opto in the PLC has failed.
If that works, then the encoder or it's wiring may be at fault. If that doesn't work, ignore the encoder until get it to work.
You do have a D0-06Dxx I am assuming.