theres no decoupling betweeen the encoder and the microncontroller, direct connection. The signal between this microcontroller and the drive controller is optically isolated as i was having a ground loop problem.

As far as the converter goes, its a prototype 3 phase Matrix converter switching at 4 or 6kHz. there is an input filter to prevent supply polution. the IGBT devices have snubber networks for protection.

Physically, the micro is situated next the motor, but when i did try increasing the distance between it and the motor, there was little improvement. i will try the steel case suggestion, but am still worried that the encoder cabling may be carrying noise directly into the micro. If it makes any difference, the micro is operating at 3.3v but a DC-DC converter is used to provide the 5V for the encoder. the inputs on the micro are 5V tolerant.