For your level translation problem a simple resistor level translator will get you to ttl levels and a 74hct level translator will get you to the cmos levels that the 328 in an Arduino wants. Basically this circuit should do the necessary translation:
+5V --- 8K2 resistor ---- input to a 74hct14 schmitt trigger inverter --- 10k resister ---- gnd / -5v input.
The resistive divider provides about 2.7V (a ttl high is < 2.4V) when the input is gnd and about .45 V (ttl low is > .7V) when the input is -5V. The 74hct14 believes (as does ttl) that anything less than .7V is low and anything above 2.4V is high. The Arduino thinks less than .7V is low but somewhere around 3.5 V is needed for a high (and 2.7 V from the divider may not register as a high!). You could also connect an Arduino analog input pin in place of the 74hct14 and measure the analog voltage there as it is in the correct range for an Arduino analog input. Note that you also need to connect the unused 5 inputs of the 74hct14 to either ground or vcc not leave them float and it needs to be 74hct (for ttl inputs) not 74hc to work.
Peter Van Epp