I have decided to convert my Logan Lathe.  What I cant seem to find is whether I need a normally closed or a normally open sensor to detect revolutions of the spindle.  A youtube video showed a normally closed but the project was never completed.
Any suggestions on a particular sensor??

I've used several of the C-3 Index kits from CNC4PC.
They work very well 4 me.
Russ

I used to use the Optek OPB 916B or 917B with good results, just needed a current limiting resistor in line with the LED, I used 220 ohm as it was being fed by 5v.
Hood

Let me throw out there this is mach3, gecko540,
Does that change anything?

The stepper I can use is only 381 oz in torque.  I was planning on running a belt drive with a 2:1 to boost torque and drop velocity, does this sound ok?

I presume you are meaning you wll be using a stepper for a spindle motor, not the best idea if that is what you mean. Steppers torque drops off rapidly when speed increases until you have almost no torque. Would probably be better to just keep the original spindle motor if you could.
Hood

Sorry Hood for not being clear.  I plan on keeping the 5 hp spindle motor.  The stepper is to drive the x axis, the carriage.

Ah ok thats a relief
Not sure what size the logan is but you should be ok on the X with that motor, Z maybe not but suppose it just depends on the size of the lathe and how hard you are wanting to push things.
Hood

I have a  C-3  index board  and it functions well with a slotted disc.
I used a Halls Affect on my lathe and it is excellent, both in preformance and provided for much easier installation on my small Atlas lathe ( no slotted disc required and uses a very small magnet).
I will note that I had two Hall's for free available and they are somewhat costly.

RICH

Its a 12x40 something.
I plan on either direct drive or 2:1 x axis
For the z ill go 4:1 with another identical stepper.
i've been looking at the sensor you suggested.

Do you already have the 381 in oz steppers?

RICH