I cant see any pictures of your project here from work, but I will check it out at home.

I ended up trying one of the ZD Encoders and have a question for others that have used them? I know the ZD stands for Zero Delay but I seem to get some button delay. Not sure if its all in my imagination though. Games like galaga seem to shoot pretty slow but to be honest, I don't know exactly how fast it should shoot. I will test it well with Street Fighter since I am very familiar with the game play.
Might be Galaga the game throwing you off. Might be a bad wire connection. Might be a processing/MAME issue.
The easiest way to check the encoder is to go into the control test screen in the device properties in windows. (Method to get there varies from the version OS you are using) You will see a layout of the buttons and joystick and when you push a button or move the joystick you will see the response pop up on the windows screen. If you see a delay there, check if it is consistent delay with all controls. If it is, try it on a different computer. If you don't see a delay in the controls on the test screen, try playing a different game or even try a different version of mame or a different emulator. Also try a different ZD encoder and a different set of wires, including the usb wires. Heck, try a different usb port. Hopefully you will be able to isolate exactly what the issue is. Bottom line is that you shouldn't be having any delay issues.

Of course, it might just be that you are convincing yourself there is a delay. OK, maybe that is just me. I have done that multiple times.

One time I was testing a ZD encoder for about an hour convinced that there was an issue with it. Turns out, on my first initial test of the board, I used a button with a bum microswitch but didn't realize it, so the presses were flakey. When I put it in my test rig to properly check, I was so convinced that the encoder had an issue with it that I was trying to tell my wife that there was a slight delay on every 25th or so press. I had her staring at the test screen for me for 15 minutes trying to find this phantom delay.

There is also that time I put a ZD on a conductive surface (carpet) while testing it out. Ugh, I was sooo convinced that there was an issue with that one as well. My wife, with zero electronics experience, pointed that one out to me.
