OK I see now.
Basically you need a conventional matrix scanning circuit.
Hears one I made earlier http://www.doc.mmu.ac.uk/STAFF/A.Wiseman/Acorn/articles/RTR1998/(RTR48)
It was designed, in 1998 for a PIC to drive and it is 20 X 7 but it will be drivable from an Arduino. I used four 5X7 matrix displays but you can just as easily make them up from individual LEDs if you want.
Also see the links on:-
http://www.arduino.cc/playground/Main/InterfacingWithHardware
That are to do with LED matrix driving.
Yes you need external buffers to drive that amount of current it's too much for the basic chip. These come in all shapes and sizes from transistors and FETs to ICs. Some ICs will do some multiplexing for you but most are based on an 8X8 grid. The advantage of my circuit is that it can be expanded to any arbirtary size.