Solution
In order to be configured with an encoder, FlexLogger needs access to a counter. FlexLogger cannot use the on board counter of a cDAQ chassis, and C Series Modules don't contain counters, therefore, most C Series Modules cannot be configured with an encoder as normal cDAQ counter channels.
There is one exception to this rule, the NI-9361 Counter Input Module, which contains 8 embedded counters. With this module you can configure your channels with an encoder. Below is an example using this set up to measure angular velocity:
This set up gives you the option to make several different types of Physical Measurement as seen below: