But as I said, if I just want to read from analog input and give it as output for now

Read with analogue read.
However outputting is not so simple as the arduino has no analogue outputs. The options are to use the PWM output
http://www.thebox.myzen.co.uk/Tutorial/PWM.html
Or to fit some sort of external D/A converter.
The arduino has a very limited amount of memory to store sounds there is only 2K of this memory in total for everything. That is only enough for a fraction of a second.
That link is the best there is at the moment. Try and understand what it is telling you.

Have you got the wav files in the correct form in terms of sampling rate.
Try this file and see if you can play that.

Many compiled languages use range checking, including Java(compiled), C#, Basic(compiled) and so on.

Have you noticed that you have to put compiled in brackets next to those. They are all interpreted languages that have been bodged.
Run time array checking is a severe handicap to any language especially in a real time environment like the arduino.

I want to understand if I make all the components 0603 package size, will I be changing more than I realize?

The size 0603 only applies to components with two terminals like resistors, capacitors, diodes, LEDs and inductors. It does not apply to transistors, FETs or much else.

Any ideas why serial monitor is not working?

This forum is very poor at mind reading. You have to help us.

I have set the serial to being in the sketch,

OK so post it ( read the how to use this forum sticky post to find out how)

The sensor is working fine

How do you know this?

but i have to just guess the light values to get any sketch working

Wow, you make a guess, you don't do anything else but guess and you code then works. As you have a mind reading arduino no wonder you thought we could read minds, sorry we can't.

provide signal to an polarization scrambler.

What is this? Link please.

1st. i need to randomly generate 0 or 1 (square wave).

Do you mean the times of the signal need to be random or that the appearance of this wave has to be random?

 

2nd. i need to do pwm nad make the random signal sinusoidal.

I understand all those words but that makes no sense. What do you want, please explain properly.

I found some lcds are serially enabled,

Yes they have a special circuit on them to convert the data from serial to parallel. This is normally a small processor like the arduino.

How can i make my LCD serially enable?

You don't want to do that because there is only one serial port on a Uno and that is used in uploading sketches. If you want to use fewer pins then look at using the I2C bus and an I2C port expander. Read this:-
http://playground.arduino.cc/Code/LCD

If you want help then ask a proper question. Also post your code correctly.
Read the how to use this forum stick post at the start of this section.

what state the arduino analog PWM is in when it is low,

I think you need to read how PWM works, it is a digital output not an analogue output.
http://www.thebox.myzen.co.uk/Tutorial/PWM.html

Glad you got it working. 
I was going to go through some fault finding today but it seems you didn't need it. I have been a bit busy over the last few days with a reunion of people I used to share a flat with at University, we had not seen each other for the best part of 40 years. It was a very odd experience seeing that they had all got a bit old.

but the source will be exernal if i understood well.

If you are powering the arduino from an external source into the power jack you can use the same voltage source to connect to the motor's supply.

Hope it's right what i did here

No, using delay in that way is wrong.

Code:

while (Serial.available())
  {
    delay(5); 

There are types on this forum that rather beat up on newbies

That is so untrue and he knows it. There are plenty of examples of doing it right:-
http://www.gammon.com.au/forum/bbshowpost.php?bbsubject_id=11425&page=

We prefer to teach rather than bodge.

Will arduino have problem if i give it 12 volt to control the motor

Only if you connect the motor directly to the arduino, which you should not do. You need a motor drive circuit of some sort.
http://www.thebox.myzen.co.uk/Workshop/Motors_1.html

I was thinking more cheaply using resistors/potentiometer.

Yes but by the time you have added:-

You could maybe use a Schmitt trigger to force a definitive HIGH/LOW.

You might as well have done it with an LM339 and have done.

How much higher does the driving voltage have to be in order to control 4V?

There will be a 0.7V drop between the voltage on the emitter and the voltage on the base. So for 5V on the emitter you will get 4.3V on the base.
However you will then have the transistor dropping the remaining voltage from the 12V which is 12-4.3 volts. Multiply that by the current to get the power dissipation in the transistor. In other words they will get hot used like this.

Of course this is assuming that the forward voltages don't add up to more than 4V,

It depends on how many LEDs you have and what colour they are.