I'm confused about where 160 baud is used and whom is talking to whom in the aldl exchange. But the attached circuit should be a good starting point, set one pin for the rising trigger and the other for the falling, and manually use a jumper for start the aldl spewing data.
There is also a pulsein function, but I don't know if arduino supports it, or if you can reset it in time. I think it blocks program execution by default as well. arduino programmers are generally not accustomed to the quasi-threaded environment of interrupts.