RFID noob project

error below.

This should take care of NewSoftSerial...
http://www.arduino.cc/cgi-bin/yabb2/YaBB.pl?num=1274820597/93#93

thought the attiny85 was an 8mhz

From the factory, the processor runs at 1 MHz. If you are using this core...

http://code.google.com/p/arduino-tiny/

... you can...

• Select the ATtiny85 @ 8 MHz board

• Click Tools / Burn Bootloader / {YourProgrammerName}

...to change the fuse settings so the processor runs at 8 MHz.

is it the rx from the reader that the chip cannot do?

It is difficult to say without knowing more about the RFID reader.