Measure the length of a rope pulled out

MorganS:
Is it being pulled over a roller or pulley so you can measure the number of rotations of the roller? A simple quadrature encoder will do this easily. US Digital make some really nice absolute encoders that will allow you to measure the rope down to fractions of a millimeter.

If it's being pulled past a window, perhaps the sensor out of an optical mouse can be used?

Hello, what do you mean with the US Digital encoder?

Is it possible to use a pulley with a potentiometer?