From: ard at p850ug1.demon.co.uk
  Hi Tony
 Your solution to the waveform is interesting. You added the capacitor
 to fix the problem caused by the 74LS14. The problem is that the
 hysteresis of the LS14 is so large that it eats up the phase
 margines of the roughly sine/cosine from the optical sensors. 
 I don't think this is the same problem. Without the capacitors, and with
 the 470R resistors, I was getting waveforms with roughtly 1:1 mark-space
 ratio, and while not exactly in quadrature, pretty darn close. The only
 problem was that every so often (perhaps 1 in every 10000 pulses), there
 would be a glitch in one of the waveforms. It's not supply relateded, and
 I couldn't repodcude it by, say, jiggling the encoder disk.
 But that glitch was taken by the elctronics as a valid pulse which upset
 things.
 AAdding the capacitors hasn't noticeably changed the mark:space ratio or
 the phasing. But it's got rid of the glitches.
 A lot of optical mice use the '14 and the output signals look pretty good
 to me.
 -tony
  
Hi Tony
 It looks good as long as you are going one direction. Try one tick
backwards and you'll understand, right after the other input has
flipped. You'll get and error count. I won't happen all the time,
just when it stops in that small window of the cycle.
 And, yes, I know a lot of mice use the LS14. I've even tinkered a
few into working with them in them. Those that have a LM339 or
similar work fine. It should have about 10% or less hysteresis
feedback. Most LS14s are in the order of 30% or more. Try
the LM339 and resistors.
Dwight