@WobblyHand
Congrats on getting it loose.
I do not have an optical scale so hesitate to suggest how to clean it or even disassemble it. My DRO is magnetic and I have yet to need to clean it. But without other instructions I would clean it in a similar manner.
I am suspect that there is lots of info on either this forum or via the web on how to clean scales. Or better still go back to the manufacturer for suggestions.
Below I will provide some suggestions on cleaning optics, but first I must say I do not fully understand your statements about return to zero, skipped counts, etc. You want to make sure that the table is actually moving. Use the 123 block before you do a lot of work on the DRO. When I got my CNC mill from the factory... it did not work right. The dro is non-physical, built into the software, and merely counts the step signals sent to the CNC stepper motors not the actual distance. So this DRO would say that the mill had moved even if it was not moving. The z-axis Gib was too tight and while the steppers would work and the counts were correct when dropping the heavy head they did not always lift the head and so would miss steps, and the DRO would have the wrong value displayed. Hence, the error in motion, but it looked like an error in the return to zero on this axis.
Cleaning optics:
I do have considerable experience with other optical components and cleaning them as I have built experimental optical systems, lenses, devices, laser optics, etc. You must not scratch them as this is the equivalent of dirt and blocks, bends or diffracts the light from its intended path. Be careful, with a very gentle hand, and actually do not touching it.... Only as a last result does actually rub an optic with anything other than lens cleaning paper wet with pure (100%) methanol. You can get booklets of "lens cleaning paper/tissue" at a photography store if not on line. You do not want oil on the optic which you can sometimes see by holding the optic at an angle and looking at the grazing light reflected from it. If there is debris on the optic. Your hands have oil in the skin so the approach is to clean some metal tweezers with soap and water and then with clean water and finally with methanol, removing all oils and particles. Using the tweezers fold a piece of the lens cleaning tissue a few times so that it is a little stiff. With an clean eye dropper drop a bit of methanol on the paper while holding the folded tissue on one side with the tweezers. Now drag the wet paper along the optic once to dissolve the oils and transfer them from the optic to the paper. Repeat with clean paper. So you can sort of see that this technique limits the pressure that you can put on the optic and so limits the scratching. You will see lots of folks cleaning things with Q-tips. However, caution, caution, caution.... as you can exert lots of pressure with these and any debris that gets stuck in the cotton is just waiting to scratch the optic.
Obviously Methanol does not dissolve all materials and I have no idea about cosmoline, but the WD40 contains several solvents in addition to oils which could be dissolving the cosmoline. Acetone, Toluene, etc... Of course the WD40 is also a potential contaminate for the scales. (By the way when I cleaned the gooey shipping wax (cosmoline) off of my mill and lathe I used naphtha (lighter fluid ... by the gallon at a paint store, and does not attack most paints) rather than WD40 and it worked great and is much cheaper and does not contain unspecified oils in it.)
I "think" the glass scale patterns are etched and use these patterns for detection. You can see why the transducer might confuse scratches for etched scales marks! That is how the older glass scales were made, but it could be these days that they deposit a material onto the glass and you would not want to wash the pattern off with some solvent. Very last resort, just wash these things .... gentle ...starting with mild soap and water and work your way towards cleaner and cleaner wash systems. I used the word "clean" methanol as there are several solvents which are not clean and will leave residues of dirt. Acetone is one of these as it leave particles ... behind sometimes.
Now a nightmare story and the resulting optimism. I had a lower story lab in an old University building with a 4x5' optical table covered with expensive optical components for a laser interferometer experiment that I was conducting. Some vandal plugged up the drains and turned the water on in a bathroom that was a couple of stories up in the building flooding the place over night. The water made its way through the old dirty concrete and plaster and was dripping all over my lab with I arrived in the morning. Some of the water had already evaporated off of the optics leaving all kinds of stuff stuck on these delicate surfaces... These residues did not come off with the gentle processes I described nor did some of it even dissolve with water or other solvents. However, lots of gentle cleaning eventually got most of it off and in most cases we were able to save many of the parts. Yes, there was some rubbing, but always with a gentle hand and soft materials. (By the way, if you wear plastic eye glasses and need to clean the oils off never rub them on your shirt tail! I simply use warm soap and water... I find a "Dial Complete Foaming Kitchen Hand Soap" dispenser pump to work well for this as it makes foam rather than a gob of sticky soap. The dilute foam is easy to wash off. )
Good luck.
Dave L.