[RickM]

Great, thanks for the info. So it appears that there is, most likely, two lights and two sensors for each code wheel. This would determine direction. I agree that it is unlikely that both would fail.
I'll check solder connections and for dust. I think the sensors/LEDs are pretty well shielded by the plastic housing. This board is also pretty well sealed in the machine case as well.

Any idea of a source for the parts or a way to determine specs for them? I'd bet there comon components.

EDIT: Perhaps the parts from an old mouse will do.....