Zing, I downloaded the image. I actually have two images for Recalbox, one is a 32gb and the other a 512gb. The issues I have described happen with both images.
I am using Recalbox version 7.2.2
Tried it this morning again, and all ok with one encoder. As soon as the second is plugged in the screen freezes and all buttons an joysticks are unresponsive. I have pulled it apart, switched the buttons and joysticks around, also swapped the encoders as well as the USBs on the Pi4, but to no avail. I can use any combination of encoder, lead or joystick on its one (ie one player), but as soon as the second encoder gets plugged in, it all goes to pot.