Here are some pics of a mititoyo DRO installed on my clausing 8520 w/M-head.
Just thought they might be inspirational. The encoders had to be shortened.
After carefully taking the ends off, note the tab and hole dimensions. 
The best way to cut the encoder is to slice at it with a small dia end mill.
Go slow when milling through the reader tape. If the end mill snags it a little,
you can re-secure it with a dab of superglue.  Now duplicale the end block mountiong
holes and the relief for the tab. If the end cap fits well, carefully re-assemble
the sensor head and go mount them.  My x ended up 24" long and the y 12" long.
The only hole I tapped in the machine, was the front one for the y.  For this
I made a drilling guide block that I clamped to the y way. Used the guide 
to drill, tap and spotface the knee casting. This assures the hole exactly 
where you want it.  Used the factory dial indicator mount pad to attach the 
rear bolt for the y.  The x encoder, via an adaptor strip, mounts to the front
of the table. One steel block mounts the x encoder to the area previously
being the stop for the table limits. Other bracketry for the y reader is 
pieces of aluminum bar. Note use of cable support clamp bracket also, strip 
of crs. It was a fum project and now my mill is way more fun to use! Also note
pic of my M/head adapter. Mill also has a vfd. 
Enjoy--    Doozer in buffalo