Pancake when you refer to a 20k "pull-up to 5v" what dose this mean? I'm obviously very green in this field.
Take a look at Fig. 1 in this link --http://www.jameco.com/Jameco/Products/ProdDS/40985.pdf
It shows the output configured as I advocate. They have the collector (output) pulled-up with a "75Ω" resistor to Vcc. That's their "test circuit".
You will want to use a 10K resistor (to +5V instead of "Vcc"). You could do away with those pull-ups entirely by using the Arduino "weak internal pullup"
[refer "Pins Configured as INPUT_PULLUP" at http://arduino.cc/en/Reference/Constants
If that's too much to integrate at this time, just use the resistors.
Also, a 2.2K resistor on the input, with your 12V situation, should be good. (A 1K is plenty OK, too; gotta love that 10mA.)
When the LED is on, the transistor will be on; when the transistor is on, its output is taken to Gnd
Doing a digitalRead
on that, the results will be:
- HIGH when the transistor is off
- LOW when the transistor is on
Got all that?