Hi MrAl, the sensor I pulled from from an old mouse and is a standard quadrature output. The IR LED beam is interrupted by the teeth and slots, and on the other side of the disc there is a dual photodiode so it produces two square waves which are 90 degrees out of phase when the disc turns.
Re the crystal, it's as accurate for clock apps as any other type of digital clock someone might make with a PIC or AVR, so it would have initial accuracy of the normal xtal variation of 10-80 PPM (Parts Per Million) ie as accurate as many cheap household clocks.
One of the good points of my software is that the timing is set with a large constant number whose value is in the millions, so that constant can be tweaked faster or slower in extremely fine steps. So that means even if the xtal is slightly off, you can still adjust it compared to any good reference clock to be extremely accurate.