Here is the final assembly - now we can use it as a Whiteboard and various other tracking for any Infrared (IR) lightsource.
On to the finger-tracker. I bought a pile of these little LED things on ebay - again, VERY cheap - and the kids LOVE them for goofing around on campouts.
Here's the final assembly - popped the old LED out, the new IR LED in, and just touch the switch to turn it on/off. Nice elastic on it, too for "hands free" hand tracking ;-)