oric_dan(333):
now 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 chip
with an IR detector/amp on it, plus a circuit that generates a pulse signal
to 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.
Thank You soooooo much, that clears up alot, im fairly new to working with the Hardware in systems so everything in my understanding is new
Also I new not to power it from 12v that would be very silly 
gdgt:
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.
It would help simplyfy it alot! The only problem is, the price, 13$ ea and I need 6 (prefer 12), I have the money in my school bank... because in our fees we deposit money to them for projects like this, but I am not allowed to order anything from an overseas store or with a credit card :3 (Also my dad is tight and he wont buy any parts 4 me)
It is exactly what I want to do btw 
I basically need a cheap way to detect objects over a table, so i can light a matrix of leds near the object.
Also, quick question, if I have the 12v dc wall adapter, connecting in parralel with the arduino, and on one side have the 6 IR segments, connect the outputs of the photodiodes to the arduino, and on the other side of the adapter have it powering the arduino, I have to draw alot of current for power each emitter and detector at the same time, say around 300ma right?, will that draw put 300 ma through the arduino and blow it up? Again also, do resistors limit voltage or current?, say I want to connect an LED to the 12v power supply, if I want it to have 5v and 20 amps flowing through it , would I do 12-5=7, R=V/I, R=7/0.0020A (Is that 20 ma), and then get a 3500Ohm resistor and connect it with the led to the power?
P.S: This doesnt use any 38khz pulse generators? http://www.reconnsworld.com/ir_ultrasonic_basicirdetectemit.html (Found it from sparkfun product)
Thanks for the replys guys/girls I reallly appreciate it 