How do I use a visible laser diode?

The quick answer is to be very careful - for two reasons:
(I am assuming a typical 5 mW visible laser diode)

1. You can easily destroy the typical laser diode through instantaneous over-current, static discharge, probing them with a VOM, or just looking at them the wrong way.
2. Anytime you are working with laser light you need to be careful with respect to the exposure of the beam to your eyes. This is particularly true if you collimate the beam as it will result in possible instantaneous retinal damage.

Many laser diodes are packaged in a housing that contains an optical sensing photo diode. This provides a feedback from the laser diode to prevent it from being over-driven. 
The diagrams below show how the laser and photo diode are connected. Laser diodes are available in visible and non-visible light output. The non-visible output is called Infrared (IR).  On MOST IR diodes one lead of the laser is connected to the photo diode and tied to the case. The case is then taken to the NEGATIVE  of the supply.  On MOST visible laser diodes the case is POSITIVE!

Typical current for a laser diode is 30-100 mA  at 1.7-2.5 V. However, the power curve is extremely non-linear. There is a lasing threshold below which there will be no coherent output (though there may be LED type emission). For a diode rated at a typical current of 85 mA, the threshold current may be 75 mA. This is one reason why many applications of laser diodes include optical sensing to regulate beam power. You can easily destroy a laser diode by exceeding the safe current even for an instant. It is critical to the life of the laser diode that under no circumstances do you exceed the safe current limit even for a microsecond!
Laser diodes are also extremely static sensitive, so use appropriate precautions. Also, do not try to test them with a VOM which could on the low ohms scale supply too much current.
It is possible to drive laser diodes with a DC supply and resistor, but unless you know the precise value needed, you can easily exceed the ratings.
You can identify the laser diode and the photodiode because the photodiode's forward voltage drop will be approximately .7v rather than 1.7-2.5v for the laser diode. So, for the test below if you get a forward voltage drop of under a volt, you are on the photodiode leads. If your voltage goes above 3v, you have the polarity backwards. WARNING: Some laser diodes have very low reverse voltage ratings and will be destroyed by modest reverse voltage. Check your spec sheet.
One approach that works for testing is to use a 0-10 VDC supply with a, say 100 ohm resistor in series with the diode, and slowly bring the current up until you get a beam. However, you still have no idea of when you are at the safe current limit without an optical power meter.
For an actual application, you should use the optical feedback to regulate beam power. You should also use a heatsink if you do not already have the laser diode mounted on one.
The raw beam from a typical laser diode is wedge shaped - 10x30 degrees typical divergence. You will need a short focal length convex lens to produce anything approaching a collimated beam.
The circuit below is a constant current regulated power supply for a CW (Continuous Wave - or Continuously ON) visible laser but it may not apply directly to your configuration of laser diode and photodiode (polarities may differ). Three terminal regulators can be used in constant current mode as long as you guarantee there will be no overshoot, etc. This is really important!

These are infrared (IR) emitters, usually 780 nm. There is a very slightly visible red emission. This may be a spurious very low power output in the red part of the spectrum or your eye's response to the IR appearing red at about 10,000 times weaker than the actual beam. The main beam is IR and invisible. Take care. A collimated 5 mW beam is potentially hazardous to your eyes.
Typical CD laser optics put out about .3-1 mW at the objective lens, though the diodes themselves may be capable of up to 4 or 5 mW depending on type. If you saved the optical components, these will be useful in generating a collimated (focused) beam.
The optics typically consist of a collimating lens, diffraction grating (to get the three beams in a three beam pickup), polarizer, prism or mirror, focussing (objective) lens. With the objective lens removed, you should get a more or less collimated main beam and two weaker side beams. Mix and match optics for your needs (if you can get it apart non-destructively). WARNING: A collimated 5 mW bean is hazardous especially since it is mostly invisible. By the time you realize you have a problem it will be too late.
The coils around the pickup are used for servo control of focus and tracking by positioning the lens to within less than a um of optimal based on the return beam.

Typical currents are in the 30-100 mA range at 1.7-2.5 V. However, the power curve is extremely non-linear. There is a lasing threshold below which there will be no output. For a diode rated at a typical current of 40 mA, the threshold current may be 30 mA. This is one reason why many applications of laser diodes include optical sensing (a built in photodiode in the same case as the laser emitter) to regulate beam power. You can easily destroy a laser diode by exceeding the safe current even for an instant. It is critical to the life of the laser diode that under no circumstances do you exceed the safe current limit, even for a microsecond!

Laser diodes are also supposed to be extremely static sensitive, so use appropriate precautions. Also, do not try to test them with a VOM which could on the low ohms scale supply too much current.
It is possible to drive laser diodes with a DC supply and resistor, but unless you know the precise value needed, you can easily exceed the ratings.
You can identify the laser diode and the photodiode because the photodiode's forward voltage drop will be approximately .7 V rather than 1.7-2.5 V for the laser diode. So, if you get a forward voltage drop of under a volt, you are on the photodiode leads.

One approach that works for testing is to use a 0-10 VDC supply with a, say 100 ohm resistor in series with the diode, and slowly bring the current up until you get a beam. Use an IR detector for this! If you get the polarity backwards, the voltage across the diode will go above 3 volts. This does not seem to damage the types of diodes found in CD players. Then, turn power off and reverse the leads. This will not damage either diode.
For an actual application, you should use the optical feedback to regulate the beam power. You should also use a heatsink if you do not already have the laser diode mounted on one. CD laser diodes are designed for continuous operation. You can use an LM317 type three terminal regulator in constant current mode as long as you guarantee that the current never exceeds the set point.

The following has been taken from Le Magicien website:

This is a simple description of a cheap KeyChain Laser that sells for 5 bucks or so.

Most common Laser Heads have two semiconductors: a LD (laser diode) and a PD (photodiode).
The laser diode will be forward biased and its cathode (LDC) will connect to a driver transistor &/or network to regulate the LD current based on the photodiode current (feedback network).
The photodiode will be reverse biased, its anode (PDA) will feed a driver regulator and thus the control will give a feedback signal for the LD driver.
The feedback is an optical one with part of the laser beam going backwards to reach the photodiode junction, as shown in figure 2.

As shown in Fig 2, the laser diode head has three leads labelled: LDC (Laser Diode Cathode), PDA (Photo Diode Anode) and COM+ (common Positive Terminal).
Inside the laser diode head is the laser diode itself and a photodiode, used to regulate the laser diode current via an external feedback loop.

The laser diode head and pin connections.

The schematic for the laser key-chain is shown in fig 4:

Below is an advert for a 5mW key-chain laser and some visible laser diode modules from Information Unlimited. The 1mW key-chain lasers can be found in many "junk-shops" for about $5.00 

      
    Patterns may vary from those shown.       mailto:wako2@xtdl.com

Visible Laser Diode Modules

  LM650P30 - 30mw@650nm 23x51mm...........$249.95

- Safely ! -

After several mishaps trying to set up laser diode feedback regulators I decided there had to be a better way! The following circuit is a result of my experimentation. This regulator has been used for CW, MCW, FM, SSB, BPSK and video with no difficulty. Since going to this circuit I have not lost a single laser diode! It has been used with laser diodes from 5 mw to 500 mw.

This is a 780nm Infrared set-up. See below for the discussion on TP2.

The circuit allows for 'soft' turn on of the laser diode via the 10 ohm resistor and 100 uf capacitor on the input of the 7805 regulator. A 1N4007 diode is provided to prevent reverse bias. The diode was connected across the supply instead of in series with one line to eliminate the voltage drop associated with a series diode. The 10 ohm resistor will limit the current and prevent any damage under reverse bias conditions. No fuse is necessary.

The MRF-510 or 511 IgFet (available from Radio Shack) provides very good linearity when used in this circuit. A 22 ohm resistor in series with the source lead is used to add a touch of negative feedback. When properly set up the current as monitored across TP1 will not change very much, if at all, when going from full power to complete beam cutoff. What is happening is the IgFet is SHUNTING the current to ground and preventing it from going into the laser diode. As the IgFet draws more current the laser diode gets less with the result that the load on the power supply remains fairly constant. The 22 ohm resistor may need slight adjustment for different laser diodes. It provides a bit of negative feedback and helps to make the modulator more linear. The circuit above was optimized for a 780 nm 5 mw laser diode.

The modulation input is DC coupled. This means you can apply a POSITIVE voltage and control the laser power. If your goal is linear operation such as AM, video, or SSB operation, you should bias this input for ½ laser power through a series resistor. Apply the AC waveform directly to the input through a capacitor.

The 1N914 and resistor diode network was added to the IgFet input circuit after one device developed a gate to drain short causing the drive to be applied directly to the laser diode!

NOTE: Most laser diodes typically have one lead of the laser diode and the photodiode tied to the case. On MOST IR diodes this is the NEGATIVE terminal. On MOST visible laser diodes the case is POSITIVE!

If the case is positive on your particular laser diode you will either have to insulate it from ground or better yet, hook it up as above and change the 7805 to a 7905 (negative 5 volt regulator) and reverse all the capacitors, diodes, etc… I always feel a LOT safer with the laser diode body at ground potential!
Several people building this circuit have used the LM317 ADJUSTABLE voltage regulator as a replacement for the fixed voltage 7805. Although this might make initial set up easier, all you need is a dirty pot or a resistor to fall off and you can accidentally over bias the diode. Use EXTREME caution if you elect to go this route!
At the very least I would suggest that you include the 10 ohm input resistor to the regulator and the 5.1 volt fail safe zener diode on the output of the regulator, the same as used on the 7805 above. This should prevent any accidents…

John - K3PGP