someone told me... (question)

I am looking at buying some linear motion units. The specs on them
are:

16" travel, 20mm pitch ballscrew, 200W Panasonic DC brush motor with
500 C/T encoder.

The seller claims positioning accuracy of 0.0005" with a Gecko drive.
I am confused by this. from what I understand is 20mm (per turn
ballscrew) divided into 500 positions for that turn is only 0.04mm,
or ~.00157" resolution.
I asked him and he replied with this:

The 500c/t encorder. The Gecko will count 1 pulse x 4 = 2000 pulse
per turn 20 mm / 2000 counts = .01 mm ( .0003937" )

something is not right. am I confused or is he.. or are we both!!? :)
Thanks for any insite yall. I have been running a stepper system and
am looming to jump into the servo world.

Colin