Check out the Digital Input Primer
, specifically the "Monitoring the Position of a Relay" section (which I think you are describing).
seracing wrote:Maybe I am overthinking this! Could I just run a wire to the terminal strip of the 24vdc signal and connect that to the positive input, run a wire to the termial strip common for the negative input. Then connect the the output to the phidget digital input. This should isolate my computer from the machine?
If I understand the set-up correctly, you are describing the section "Using a Capacitive or Inductive Proximity Switch" section from the Primer, but without the ground connection to the 1011. The digital input would not reliably detect the state changes without the connection between the ground of the sensor to the ground of the 1011. This would not be isolated.