what input pin is it using?

That seems unnecessarily complex. Unless your diff has broken you know that the propshaft speed is proportional to the average of the two wheel speeds so all you need to do is look at the ratio of the two wheel speeds.

i disagree the car is normally a front wheel drive car, when slip is detected it will lock up the rear diff (as it doesnt have a centre diff) to transfer the power to the back wheels. in its original state the car will decide how much lock to put on by looking at the outside temperature, steering angles, throttle position, G force meter and overall speed. so this will be a simple system compared to the original

If the car is not going in a straight line the outer wheel will turn faster than the inner wheel.

yes it will this is why i want the arduino to pick the fastest moving wheel

I have been assuming that you have done at least a few of the example projects that came with your IDE. They do require some hands-on to teach basics.

yes i have so my knowlege is very limited

Suppose you hook up the sensor and wheel you have and see what you can get from that?
The sensor is digital right? It's either on or off, LOW or HIGH, 0 or 1?

So write code to read the sensor and if it is HIGH you turn a led on (UNO has built-in led on pin 13, I dunno about the MEGA) and if it is LOW you turn the led off. Then turn the wheel and see how the led flickers. If it does not then it's time to check the wiring and the code.

yes i would of thought so i will have to try that
but i am on the understanding that it is a hall sensor
i will do that and let you no what i get