ok further testing and i noticed its as soon as i ground the relay that the diode give the funny reading. perhaps i am doing something different with my grounding in this circuit. how separate are you supposed to keep the ground from a 12v psu and the regulated current from a 7805? can the arduino and other components take the ground from the 12v psu? or do you make a separate ground from the 7805 center pin? ground is so confusing!