Thanks to everyone for your help. the decoupling capacitor did the trick. I sure have a lot more to learn. again thanks
The subject of decoupling (by-pass) capacitors comes up all the time. These capacitors are such a piece of "tribal knowledge" within the experienced design community that they are often not shown on schematics. It is assumed that their presence is required.
It is almost impossible to have too much decoupling. A few exceptions are:
1) On the output of voltage regulators where incorrect capacitance, or capacitance of the wrong ESR (equivalent series resistance), make the regulator unstable. The regulator data sheet is the guidance for this.
2) On the output of voltage regulators, where shorting the INPUT to the regulator, even momentarily, causes the output capacitor to discharge back through the regulator, destroying it. The regulator data sheet is the guidance for this, too.
Decoupling caps serve two functions. Big, fat, electrolytics like aluminum and tantalum act as small batteries. They can provide very heavy currents (amperes) for a short period, and prevent the power supply to the chip from sagging in voltage when the chip is switched at high speeds and heavy currents. Many folks think that because their circuit is only drawing milliamps, little bypassing is needed. Not so! It's drawing milliamps on average, but digital circuits switch those milliamps in nanoseconds. The instantaneous current is very, very high. The electrolytic cap acts as a local battery to provide that current, which the circuit's wires and printed circuit traces are preventing from getting to where its needed fast enough.
Unless there is a good reason NOT to use them, solid tantalum are almost always a better choice than aluminum electrolytics. They don't rely on liquid electrolyte. They can't leak. They're smaller. Their capacity (generally) changes less over temperature. They (generally) have a lower ESR, so can supply more current faster.
The downside is that they (generally) cost more. Sometimes, a lot more.
The other, little, guys, like the 0.1 uF and 0.001 uF ceramic capacitors are for radio frequency by-passing. Their function is to block direct current, while allowing high frequency impulses from the rapid digital switching to shunt to ground, keeping the chip's DC supply clean and free of transients that might be interpreted as a logic signal.
None of this works unless the capacitors are mounted as close as possible to the source of the noise, AND couple to a good COMMON ground. How close? One inch is a good rule of thumb, closer is better. What's a common ground? Ideally, a plane of copper embedded within the printed circuit that floods the entire circuit area. That's usually what multi-layer boards are all about, and the higher the operating frequency, the more critical the grounding and de-coupling becomes.
Flying wires and multi-point grounds on a bread-board at high frequency are usually doomed to failure, especially when you throw a noisy, high current device (like a motor) into the works.
But with good layout, and good by-passing, there is no reason a Picaxe, a 5 amp stepper motor, and it's associated driver device can't get along happily on one small board, all driven from a common battery.