I wish I took a few more photos before I got to this point. The photo shows the mouse encoder wheel already hot glued into the end of the racing wheel shaft.
After you open up the housing, there are 2 more screws that clamp the wheel shaft down. Remove them first, then the wheel can come out of the housing. The very end of the wheel shaft slides onto a small potentiometer. The pot has a small plug with two wires attached to it. The wheel moves this pot and sends the turning signal to your computer. For our hack we won't be using this pot. Remove the plug. The potentiometer slides off the wheel shaft and out of housing.
On the wide part of the wheel shaft there's some white stuff - it's silicone grease. I added this just before putting everything back together (remember I said I after I finished). When you take every thing apart you'll see some clear silicone grease in a couple of places. It's easier and cleaner to wipe it all off first, then re-grease before reassembly. The stuff I used has a whitish tint to it, but it is silicone based grease.
Also to point out, in the same location as the grease in the photo, your wheel will have a plastic tab that projects from the shaft. This is one of the two restrictors that limits the wheel rotation to 270 degrees. Our hacked wheel will spin 360 degrees freely. I removed this tab by first cutting it off with dikes, then filed it down, then sanded with 100 grit, then 220, then 400. Keep it as smooth and round as possible. On my first wheel I used a dremel to grind it off, but this method worked better.
Last to point out in this photo - your wheel will have the wires coming out through the hollow shaft that connects the buttons on the wheel to the circuit board. We cant keep the buttons plugged in anymore since our wheel will be spinning 360's. I unplugged the connector from the circuit board and just stuffed it into the hollow shaft.