Does the device (transmitter & receiver)needs to be stable for IR data transfer?
Is it possible?


My company uses infra red laser diodes to transmit telemetry data off shafts at data rates up to nearly 700 mega bits per second so there is nothing inherently flawed in this method however, at this sort of speed photodiodes and their amplifiers need to be carefully designed and you do need pretty good alignment. 


  does line of sight become a problem?


So, assuming you can place the transmitter at the centre line of the shaft-end you should be OK. Lower speeds mean you can use fast LEDs and less problematic (and more sensitive) photodiodes.


  Does the device (transmitter &amp; receiver)needs to be stable for IR data
  transfer?


Stability = no loss of data


  Will the fast running shaft be a problem?


Yes, you will need to mechanically balance your add-ons and make sure they can withstand the g-forces. We always make sure that any PCBs are subjected to g-forces that push components towards the PCB they are soldered to (at distances close to the shaft centre-line this is far less of a problem of course).


  how to accomplish this?


That's a money question LOL.

Don't forget that you need to supply power to the electronics mounted on the shaft - a battery may be OK but you will need to mount it as close to the centre-line of the shaft as you can AND watch out for imbalances.

A typical car tyre will rotate at about 1400 rpm at 100 mph so balancing is a really big deal.