now with that it doesnt have anything in the cuircut to carry a signal???
Quotenow with that it doesnt have anything in the cuircut to carry a signal??? If you download the datasheet for the IS471F, you'll see it is actually a chipwith an IR detector/amp on it, plus a circuit that generates a pulse signalto the external Led. It is specifically made for synchronous detection of the Led signal. It is really a self-contained version of the circuit that roboticists have used for many years, which uses a separate 38-khz pulse-generator -> Led, plus TV IR-remote detector for pickup. If you do a further search on "infrared proximity detector", you'll find examples of the latter circuits.Also, if a chip says Vdd = 5V, do not try to power it from 12V.
You may still be able to do what youre trying to do with your setup (assuming I understand you correctly). Just have the IR emitters always on and when an object is close it should bounce back some of the IR light that the photodiodes should be able to pick up on. I'd imagine this would take a good amount of tweaking before you could get it working reliably especially with a matrix of LEDs but I think it could be done. Have you considered using a sensor such as this http://www.sparkfun.com/products/242 ? Seems like it would simplify your design.