Epson 7600 Head Alignment Problem

Hi,
I have (2) 7600s. One works great and the other is misbehaving :(

The misbehaving one has the colors out of register (fuzzy out of focus prints).
When I run the head alignment, the end result is all the lines are way out of register. I replaced the encoder strip. No improvement.
Could it be the encoder beam reader has gone bad? Other ideas?

Thanks
Steve