Everyone, thank you for your help. You have all done WAY more than ever expected. You have practically handed me all the data I would have ever need. Even though I allready know a great deal of TTY, I really admire all of you for your outstanding efforts in helping me with this project. Im glad to see that there are still people arround thats willing to go above and beyond the expectations from a call for help. With all that said, let me tell you what i have been cooking up.

I had to find a replacement for the XR Encoder/Decoder. It works the same, just different passive components. I will try and use the NJM-2211 ( http://www.njr.co.jp/pdf/be/be06008.pdf ) for the CODECs. I would try and use the simple socket modem stated in earlier posts, but i have dealt with that modem before and for a simple project as TTY (heh... SIMPLE he says) the modem is too costly, and it way more powerful than whats needed. Im trying to keep this project simple, and inexpensive. As for a keyboard, i will probabbly just use a Mini-AT 86 Key keyboard i have laying arround. Im going to try and use an old 4x16 green LCD that has been sitting arround.
Im going to try and use parallel LCD functions if i can for now. I dont want to build a Serial LCD Backpack and make this project more expensive, but i will if i have to.

Im still a little dazed and confused on how im going to code this. This is going to be my 1st PIC project. I know im jumping into the deep end on this project, and I am way over my head, but im sure I can figure this out.

As for a simple hardware layout, this is what i have in mind

[Headset]-[LM 386 OP Amp]-[FSK En/DeCoder]-[PIC]-[LCD+Keyboard]