Hi knji,
On your BNC-2110 you have the "Digital and Timing IO" connector block. This is what you will use to connect your signals for your quadrature encoder. In the application note it says "Pin 37/PFI8/GPCTR_Source." You would connect this to PFI 8 on your BNC-2110. The other connections are just the same. For more information on the pinout for your DAQ card look in the E-series help manual:
http://digital.ni.com/manuals.nsf/websearch/0E0DFDBB7706687A86256F6300560584?OpenDocument&node=132100_US
Go to IO Connector >> IO Connector Pinouts >> 68-Pin Connector
-Sal