Thanks - well there has been some good progress. The low profile encoder fits great and allows the PCB to be replaced properly in the front panel, without any stress on it or the other switches. Also, the plastic AMS knob fits better on the shaft and no filing is needed to get it on (or off).
Reconnected the ribbons and wires, powered on the deck and it works! Rotating the dial moves through tracks on MDs, and the push-on switch plays the track. In the menu the rotation similarly moves back and forth through the options, and the push-on selects the one arrowed. However, going forward through the numbered tracks on an MD, or going through the menu options is via an anticlockwise rotation, whereas it should be clockwise (checked on a working MDS-W1 deck).
I don't know enough electronics to understand if this can be corrected, say by swapping the pins of the A and B contacts where they are soldered to the board (see 'quadrature output table' in previous post, lower left hand diagram, where I presume CW and CCW are the rotation actions). Would anyone be able to suggest a way of reversing the current action?