Graynomad:
I've not use distance transducers but can't you just bounce the signal off an object on the moving slide?
For something like this, I'd use an ultrasonic transducer with a singular element for send/receive; something from Hexamite, perhaps:
...of course, you would have to build your own transmitter/receiver circuitry (an oscilloscope will be handy), but Hexamite does provide reference designs for microcontroller interfaces their products.