Is this a quadrature encoder or something more fancy?

I updated my comment above with a link. Just an ordinary quadrature encoder, but revolutionary back in the day.

Definitely not invented by HP though.

https://www.usdigital.com/blog/who-made-the-first-optical-en...

Okay perhaps not, but in my experience, HP was the first company to use them as a human interface device (HID).

Long before then I saw them on CNC gear that had nothing to do with HP.

What year? I first encountered one on a HP 8568 Spectrum Analyzer in 1978. They were also used on the HP 8672 synthesizer a year before that.

The company that made the ones I'm talking about is called Haidenhain and they were making these long before then. I think they go back as far as the 50's but I can't document that. But you'll find them all over old CNC gear.

Obviously the 50's was before the LED was invented. Did they use light bulbs? Also, they would also have had to use CdS photo-resistors instead of photo-transistors. Probably required a few vacuum tubes for the interface too. Seems like a lot of effort vs. a simple potentiometer.