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This is a nice article on how to identify and extract rotary encoders. It then explores how to decode your rotary encoder and has a little lesson on Quadrature Encoding. It does not go into extreme detail, but there is a lot of useful information.

Some recent stereos do, especially ugly boom boxes and (non-ugly) car stereos, typically for the digital tuner knob that can rotate forever and ever. And fortunately, I have some of each in the junk bin.

More about Rotary Encoders