It sounds to me like you are missing the encoder pulses, the 1-2 rpm could be accounted for noise in place of the pulse.
The spindle does not require the encoder unless you are doing threading or engage SFM, otherwise it is just for display.
Check the wiring and connections, unscrew the MS connector on the back of the encoder and check for broken wire or contamination.
While you have it off, just ensure you have +5v supply on the power pins.
There is a way to check the encoder on the bench but it is difficult without a test MS connector and test cable.
Al.
CNC, Mechatronics Integration and Custom Machine Design
“Logic will get you from A to B. Imagination will take you everywhere.”
Albert E.