Yes. Neither is better. It depends on what you want the feel of the controller to be like. Pots have a fixed movement of 300° thus always giving you visual feedback off the position. Encoders can have a much higher resolution, but don't give you any hint about the position and can be rotated in either direciton endlessly. Either one will work. That's a matter of adjusting the code. But is doable.
Follow the instructions in the readme.txt (and possibly instrcutions in the main.asm) that came with the app. Pull the SID (always good to be on the safe side), send CC, measure voltage at current pin, repeat.
You seem to have a lot of intermittent errors, proto. Earlier in the chat you mentioned that your PSU stopped working, the other core (which now mysteriously works) didn't even send out an upload request, ... Try and focus on one thing at a time.
Well you already found this gem: http://ucapps.de/mbhp/mbhp_8xsid_c64_psu_optimized.pdf It has all the wiring in it ;) Even though the silkscreen on the SID PCBs is a bit different the pinout is the same - wire them as shown in the pdf.
Disconnect everything else, work on one problem at a time. With 20 LEDs I assume you have a DINx4 connected. Remove all SRs and see what it's doing now. None of the LEDs should be lit. Measure the voltages on the supply pins of each SR. All good? Stuff the first one, see what happens. If all LEDs are suddenly lit - try another SR in the place. What happens now?
Since the button is just a switch and not a knob you won't need an aout for the job. A pic pin will do (possibly needs an opamp/transistor to buffer/adjust the signal).
How did you upload MIOS and the SID firmware? Using smart mode? What exactly do you expect the mbSID to send out? Besides the upload request on startup the mbSID will not really send out anything ;)
Ja und zwar der Großmeister TK selbst ;) Machbar ist das auf jeden Fall, das "wie" ist eine andere Frage, schlimmstenfalls ein zweiter Core und ein bissel eigener Code.
That's correct, to run v2 you'll need a PIC18F4685. J2 on the core is +5V/Gnd which you don't need to attach to anything. Directly soldering the wires to the headers is in fact usually not a great thing to do, as it makes checking and replacing a lot harder. Pull the SID chip and check the voltages first.