HELP with Infrared emitter + sensor problems

You might get better results if you flash the LED on and off and check the input for a change between those two states. That will help filter out background light.

int onVal = 0;
int offVal = 0;

// Take 10 samples with the light ON and OFF
for (i=0; i<10; i++)
    {
    digitalWrite(IRLED, HIGH);
    onVal += analogRead(IRTRANS);
    digitalWrite(IRLED, LOW);
    offVal += analogRead(IRTRANS);
    }

if ((offVal - onVal) > THRESHOLD)  // Value to be determined experimantally
   {
   //  Light up the LED
   }
else
   {
   // Turn off the LED
   }