when I boot up my MAME machine windows thinks there is a constant input from the player 1 rotary.
Sounds like either the rotary encoder isn't initializing properly due to an intermittent/corrupted firmware
or maybe an unused contact on the daisy-chain ground for the buttons/sticks is shorting against the rotary encoder PCB.
I did notice in MAME it shows 10 instances of the rotary joysticks, could that be part of the issue?
Not sure if this is a symptom of the encoder not initializing properly or if there is a separate issue with Windows.

As I understand the Ikari sticks they are essentially 12 contact closures with each rotation position represented by a different keystroke.
there must be a difference in the iPac configuration, wiring, or the keys you are mapping.
The U/D/L/R microswitches on a mechanical rotary joystick do work with a typical encoder like an IPac.
The rotary part is a 12-position rotary switch (blue), but the rotary encoder on the PCB has it's own USB connection and
does not work like an IPac.
The 12 contacts are connected in 3 groups.
- A includes contacts 1, 4, 7, and 10
- B includes contacts 2, 5, 8, and 11
- C includes contacts 3, 6, 9, and 12
The rotary encoder sends one short keystroke pulse when you turn one click clockwise from A=>B, B=>C, or C=>A.
The rotary encoder sends a different short keystroke pulse when you turn one click counter-clockwise from A=>C, C=>B, or B=>A.
You can define the rotary encoder keystrokes/button presses and “Switch Debounce” (pulse duration) via the WinIPAC program.
http://www.ultimarc.com/12wayrotary.pdf
Scott