[TubaMorg]

well with the LED on at least you know it has power (12v right?). Maybe there's a short somewhere? Our robot is still in the crate so I'm trying to remember...The receiver has 4 insulated wires, 1 for ground, 1 for +12 and the other two for signal. When you strip down the outer cable insulation there is also foil and a bare wire right? Make sure none of that is shorting. I would think that with the LED always on the sensitivity is set too high. Or check the lenses and make sure they aren't blocked or smudged or something...clean em off.

Good luck!

EDIT: Oh BTW the adjustment for the emitter changes the IR beam intensity. But since your receiver is showing an LED even without the transmitter, focus on that problem first.