Thanks leo
I think you are referring to this method
You are welcome, and yes I was indeed referring to that principle, although the output isn't actually shown in the circuit diagram - I might question the source.
2nd step - making single ended output into a dc signal that moves between 0-5v for arduino adc.
This is incorrect, although you probably meant it correctly.
The output will be converted into single ended, but that doesn't mean that it is a dc signal. The signal is still an ac, but the reference point is now ground instead of 'floating' - insanely simplified.
As far as the transformer goes, I have no clue, unfortunately.
I am hope somebody more experienced will join in,
Leo
PS: I will try and think about it again, but I know to little about differential signals to make a sound statement - no pun intended.
But if you have any other questions, I might be able to help.