Adding indicator LED to optointerruptor circuit?
Check the minimum voltage that will be accros the LED for the current you are giving it, then compare that to the minimum guaranteed voltage the arduino requires to interpret the digital signal as high.  You will probably find that the former is less than the latter.

As always you need to read the datasheets before just hooking stuff up.

A better way to do the indicator is to have the micro produce a separate signal just for that purpose.  This will be a separate digital signal, so driving the LED is decoupled from the current and voltage requirements of the detecting circuit.  The firmware also doesn't have to exactly mirror the detection signal on the LED.  It can, for example, stretch short pulses to some minimum value to make them easier to see.