Reflective Interrupter - sensitivity issues.

Ketenai,

I was able to ask a few knowledgeable people and here are few thoughts that came up. 

Most of the hand controllers that use a light  wheel to track joystick position or "power wheel" functions will use a  slot sensor instead of a reflective sensor due to the speed and  simplicity. You don't need to worry about distance from sensor  (convergent point). Also, reaction to the light being cut off is much, much  quicker than the reflective sensor.

The Osram sensor in question does not include modulation and so incident light will false trigger this sensor when exposed.   A modulated light output might help with interfering light, but they tend to be more expensive and are hard (read: nearly impossible) to sort out which ones have the feature. Another related note, since the LED is also run continuously it is limiting the distance that you can use it.

This sensor has a cover to reduce incident light but doesn't help the power or distance issue that you are talking about.

You might also take a look at the AS5035 or other magnetic position sensors like those from austriamicrosystems.  Their abilities and fine resolution might make for a suitable substitute in your application.  Just use a neodymium magnet and have some fun.

Unless I'm misunderstanding your application, your best bet is probably to find a simple slot sensor.