K its hooked up but the trackball is not working. And my spinner goes all over the place now. Is there a jumper i need to change or maybe hook it up to z and x instead of x and y? 
The owner's manual linked above has directions on how to set the spinner to Z-axis operation.
If you change the spinner to Z-axis, there is a method
here describing recompiling MAME to work around Windows handling of Z-axis as 1:4 (1 encoder transition=4 steps) as opposed to X- or Y-axis as 1:1 (1 transition=1 step).
This is probably the best plan to keep the spinner and trackball sensors from confusing the encoder. The trackball will act like a mouse (X-Y) and the spinner like the scroll wheel. (Z)
Just to make sure the Blue and Purple wires are Y axis, Green and Yellow are X axis?
Only if you mounted the trackball housing turned either 90 or 270 degrees.
According to the Ultimarc page, blue and purple are X-axis. (horizontal)
Green and yellow are Y-axis. (vertical)
If you're having problems, start by just connecting the Y-axis.
Once you do that, plug it in and see if the trackball works for vertical. (you might have the trackball turned 90 or 270 degrees)

If the vertical is backward, swap wires.
The other possible problem is if the trackball is "active-low" and the encoder is "active-high" or vice versa. (We'll look into that possibility if isolating the trackball connections to just the vertical axis doesn't work right.)
Scott