Could this be the photo eye is meant for resistive loads, but the lighting contactor is essentially inductive? Internally the photo eye may have a zero-crossing triac driver, which is suitable for resistive loads, but you would need one with all-angle triac drive or just relay contacts. Tried another type or brand of photo eye?
Another possibility could be line volts droop when contactor pulls in affecting the photo eye?
[This message has been edited by gideonr (edited 08-23-2005).]