If you want to compare with 0 and 1 you need to shift right the results of the rotaryA by 1, and the rotaryB by 6 if I'm not mistaken.
Because you are reading PORTF7 you dont get a 0 or a 1, you get 0b10000000 or 0b00000000, or in decimal 128 or 0.
And PORTB1 gives you 0b00000010 or 0b00000000, or in decimal 2 or 0.