I used the
Arcade Stupidity HD hack, but instead of using a ball mouse, I'm using an optical mouse I got from work that was broken (buttons didn't work, but the rest is fine).
I drilled a 1 1/4" hole through the aluminum plate that comes with the
3x2x1" project enclosure from Radio Shack.

I mounted the hard drive bearing in this hole, placed a foam washer from a CD/DVD-R spindle around it, placed the collar on the bearing, then screwed the top of the bearing on. I used the foam washer to make the spinner more snug and less wobbly.
After that, I super glued two large washers to the bottom of the bearing. The largest one on bottom is what the optical mouse reads as a surface.
I bought a
4-pack of metal standoffs at Radio Shack.

Two of these I used to hold the optical mouse board in place, and one I used to attach the knob.
I held the mouse laser up to the washer and tried to determine the best placement to get a good left/right movement. This was trial and error, and it's still a little off, but reads great. Once I found a good spot, I marked it with a pencil and drilled two small holes in the aluminum plate. I attached the standoffs and put a drop of super glue on each. Depending on the mouse you use will determine where you place the screws from the standoffs. Apply super glue to this point.
Sorry if this wasn't super helpful. I'm at work, so I can't get too in-depth.
EDIT: Here's a terrible picture of it. I hope you can even tell what it is (I hate this camera)