K8055 digital inputs and infrared detection

I’ve got the K8055 working well however the I have an infrared light barrier module that I am having trouble connecting to either the digital or analog and reading a signal.

http://www.kemo-electronic.de/pdf/b216/b216.pdf

By default the infrared kit has a 12V 100mA output that would normally control an additional relay kit but am I right in that should be sufficient signal to use as an input. Just incase 12V is too much I have also used a LM7805CT Voltage regulator to ensure the input voltage to the K8055 is 5V.

What I have noticed is that when the ground wire from the infrared kit is connected to the ground on the K8055 the infrared kit stops sending a signal. What is the correct method of connecting these two kits together?

Diagram http://picasaweb.google.com.au/pdodds/Electronics/photo#5229878527439079106
Schematic http://picasaweb.google.com.au/pdodds/Electronics/photo#5229878528878177362

Even 12V is not too high for the K8055 digital input and 5V is OK too.

The connection is anyhow OK. (GND of the the infrared kit connected to GND of the K8055.)

The issue was the ground of the 12V transformer running the infrared PCB. We ran an isolated test with a 12V battery and all worked perfectly although we also found out that the output from the infrared card is not suitible to trigger the digital input but can be read via the analogue inputs.

A relay is required between the two kits to trigger the digital inputs.