I found a post from 2019 where you showed a screenshot of your webconf How to tell if the software update completed successfully??
Of coarse you were using a different image back then, but I noticed the wiring was MCP23017_ENCODERS.
You could go back to webconf and change Kit to Custom and then change wiring to MCP23017_ENCODERS to see if it makes a difference. You will need to leave the Soundcard: HifiBerry DAC+ and Display: PiScreen 3.5 (v2), otherwise you will likely get the ERROR screen again.
If this doesn’t work, you may want to post your current log. I’m no expert, but those who have been responding here are, and will probably be able to help find a solution, whether it is a software or hardware issue.