from computer to computer. the frequency generator will be on one computer, which is the source of dtmf tones. the other is where the ascii character be displayed (is that possible?)...
actually its just a single character that will be displayed not an entire word. example "A, or 4, or $ "...is it possible?

 

On the computer that creates the DTMF tones, how many combinations are you able to generate is it 12 or 16. Why did you not tell us this in your first postings? For your own shake, give us all details. By not doing so you have probably wasted two days of your project time.

 

there are 16 keys on dtmf generator, and each key has a unique tone, right?
in what im planning to design, 4 keys only can actually be used, the asterisk(*), sharp (#), 1 and 0...
asterisk = start of transmission
sharp = end of transmission
1 and 0 = data
so if i transmit an ascii character,
for example letter "A", i will type in the keypad "01000001"
which is the equivalent 8-bit code for that...
now the problem here is, how to decode the tone so that in LCD it will display letter "A"?
i guess its a bit clearer now,
actually this is somewhat the idea of retched.
i know this is more on software..

 

If you can send 16 different DTMF tones you can send the ASCII code as high and low nibble http://en.wikipedia.org/wiki/Nibble so to send a "A" , you send the nibbles 0001 and 0100. That will be same as pushing key "4" and key "1" However if we look at output from the DTMF chip you plan to use(picture). The output is somewhat rearranged so 0000 is the key "D" so in order to send the "P" you must push keys "6" and "D" I think you should start in this end. Then you get things working you may implement a lookup table. So then you push "0" the PIC will this as the nibble "0000" And key "A" will be interpreted as "1010"

 

Wouldn't you need a uC to take the analog signals and then process them into Alpha numeric codes? Because if your talking about what I'm thinking where you press 1-1 to get a B, then 2 to get a D, or 3-3-3 to display a G. So would you program the uC or DSP to recoginize each tone, convert it to digital, then program your wait times, and end key to move to the next letter? Then decipher your tones into words or letters?