I am having the same problem i am going to change the darlington paired i. UL2803A next to the rotary encoder connections and also the OP-AMP iC 353N.
In my case i checked the grounding, checked the rotary encoder swapped the y and axis drives and came to the conclusion it was the driver board.
If you found a solution as well let me know.
Regards
Makrani ( E.Africa)