Hello Amrish,
If you go to ni.com and search on "Using Quadrature Encoders with E Series DAQ Boards" you'll find an entry of the same name. This paper explains all about using quadrature encoders with E Series boards. The typical problem is that the counter on this board was never designed for quadrature encoders. The trouble is that the counter cannot be set up to count both low-to-high and high-to-low transitions. It only counts one or the other. This works for most counting applications. But if you get into a case where you are rocking back and forth over a transition, what you want is for the counter to count up, down, up, down. But what you get is say up, up, and then your count is off.
The solution is to use an LS7084 clock converter chip
between your encoder and the E Series board. I've done this a lot, and it works flawlessly. This paper explains all the details.
Best Regards,
Doug Norman