All that is perfectly reasonable, remember pins 0 & 1 are used by the serial port so you can't use them for anything else. I would use a shift register to get more outputs. See the tutorial in the learning section for this.
I would do all the timing in the Arduino and then upload times to the PC.
I would consider using Pin Change Interrupts (http://www.arduino.cc/playground/Main/PinChangeInt) for the 8 finish-line sensors. Put phototransistors under the track and a light over the track. When the car goes between the phototransistor and the light the interrupt will occur and you can note which track and what time.
The “christmas tree” starting lights can use a decoder if only one LED is on at a time. This would reduce the pin count for lights from 5 to 3.
Remember that the ‘Analog Input’ pins can be used as digital i/o pins.
Driving a relay with an output pin and transistor will allow you to turn off track power.
If the start line and finish line are at the same place, the Arduino can detect early starts (someone crosses the line before the GO signal).
If you have a race of multiple laps the Arduino can measure lap times and send them to the PC.
Need to do some reading up now on which components to buy.
So Far I have a list of
Mega ardino,
Bread board so I can mock up
140 puece wire kit
A beginner parts kit so I can play with other projects as well
4* red LED
1 * Green LED
8 * photo Transistor VISHAY SEMICONDUCTOR - BPW85 - TRANSISTOR, PHOTO, NPN, 850NM, T-1
8 * relays for the connection to the power.
Getting Started with Arduino Book (paperback)
Any recommendations for repays to use and if the photo transistor is any god would be appreciated.
I would get 8 light sources for your photo transistor. Normal is IR emitters or white LEDs depending on the match with your photo transistor.
I would also get 8 2n2222 transistors to drive the relays with and 8 diodes like 1N4004 to put across the relay coils.
Finally also get 8 1K resistors for the base resistors for the transistors.
If you can find a relay with a 5v <40mA coil you should be able to drive them directly from the Arduino pins (with a diode across the coil to protect against inductive spikes). If you use a resistor and transistor for current switching you can use a relay with a higher current (and/or higher voltage) coil.