That looks like a VRS sensor. They output an AC waveform with the amplitude and frequency changing with speed. You need a zero crossing detector to properly interface the sensor. National Semiconductor makes the LM1815, which is an easy solution for that. At one time there was a rumor this chip was being discontinued, but that is not correct and they still have it in active production. National will send you free samples; I got a few of these. I recommend this solution over trying to homebrew a circuit to do the same. At the time I designed my datalogger I worked from the premise I was told from an FAE at Motorola (that the chip would be EOLed) and designed a discrete interface, but it wasn't easy and required fiddling with components to get it to work right. At that time the LM1815 was the goto chip for this sort of thing.
Ok, interesting. It does appear that I can order them from digikey got a little over $3 each. For a free sample, I would have to wait 6 weeks I am impatient when it comes to waiting for parts! I may have to order a few to mess around with.
Edit : From what I am understanding the data sheet, I will not need any extra components besides a few easy to get a hold of resistors and caps. I did see on pin 7 a 1.6M resistor which I don't have in SM. Does it have to be that large? The closest I have in surface mount is a 1M
1M will work, but timing may be a little off at lower speeds. That sub circuit is the peak level sample/ hold circuit, and the resistor determines how fast it "resets".
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Edit : From what I am understanding the data sheet, I will not need any extra components besides a few easy to get a hold of resistors and caps. I did see on pin 7 a 1.6M resistor which I don't have in SM. Does it have to be that large? The closest I have in surface mount is a 1M
Data Sheet : http://www.ti.com/lit/ds/symlink/lm1815.pdf