Thanks, your info seems to be helpful. Tried to do some google on optoisolators but couldn't figure out the exact purpose and how they could be used in the current situation I think the stuff is getting complex for me to handle. Will have to do some background study on the suggested options.
My first impression was that optoisolators act more like a fuse breaking the circuit on detecting additional voltages, but wasn't sure how it could be used in conjunction with by the arduino to track if the device is powered on. Any links for reference would be helpful. Correct me if I'm wrong.
Hope the optoisolator idea works for you. Keep me posted.