Reading engine speed, the arduino was placed in the engine bay as i'm reading other things as well. Saving on wires.
But HEY i got it solved. I first placed a resistor between the LED side (10K)...that didn't work
I then placed a 100nf cap on the output side and that did the trick so well I am still in disbelief! Wow! I even removed my little "software filter" to smooth out the readings. I hope if anyone should run into this issue the will find that those little ceramic dudes are more important than they look! haha.
https://forum.arduino.cc/t/opto-isolator-works-fine-on-bench-noisy-in-deployment/541548/5
https://forum.arduino.cc/t/oscilloscope-on-motorcycle/696127/12