Try it with the phototransistor connected to an arduino input pin. Take the LED out of the circuit and connect it up like this:
5V ---- /\/\/\/ -- wire to Arduino input pin---- phototransister --- Gnd
Run one of the switch test sketch's, the wire to the phototransistor will act like a switch and make the digitalRead go low and high as IR light level reaches the correct level for the phototransistor.
In picture form, you want to wire your emitter/phototransistor circuit something like:
You'll want to tweak the two resistor values to achieve the ideal response curve for your particular emitter-detector pair.