This looks interesting: VMarker Building this with FEZ would be cool.
link doesn’t work, remove the last dot please.
Done, thanks much. Strange thing is that the period was outside of the url tag. Oh well 
I’m not sure why the extra processor board is needed. You can do all the video processing right on the PC. Sensing a colored dot like that is easy-peasy with OpenCV.
The real trick is sensing where the IR marker is on the 2D plane. Like Jeff said, not sure why the extra device is needed, unless it is just there to handle the IR comm to the USB port. On the PC, it would just be WPF transparent form in the forground using already built Ink apis. Could use with any application on the PC. I thought they already had such devices out.
If the screen was a large touch screen, instead of projector, you could also do the same with your finger(s). Add MS multi-mouse api, and could do some other interesting team work things.
I’m guessing that the best way to achieve portability here is to have this emulate a mouse; that means, no software in the PC and do it all in the uC. I saw that a few days ago from a Sparkfun tweet and thought yeah, a Fez could do that…
How to figure out X,Y of IR signal source?
I’ve not delved too deeply into their items, but here’s what I think they have.
A camera is connected to the uC; in the initialisation it reads the X,Y points of the corners of the screen, when a laser pointer illuminates the point; in use, it reads the X,Y of the pointer and feeds that, and movement, as a mouse movement.
take a look at this link:
http://johnnylee.net/projects/wii/
The second project, “Low-Cost Multi-point Interactive Whiteboards Using the Wiimote”, describes Wiimote that track sources of infrared (IR) light, or track pens that have an IR led in the tip.
Wow the wiimote project looks cool. I think it would be fun to setup for my kids to play with, so they can write on the computer screen.
My five year old tried this already with a regular pen. The result was about thirty minutes of me working to get it all cleaned off.