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Inside my intake I have a plasit diaphram thing that moves when the engine is reved, when it is idling I push the diaphram back and it stalls. Is it supposed to do this??
If I install a cai will i still need the diaphram to prevent it from stalling or is it something to do with my ecu like reseting it when i put th new intake in?
The cai is supposed to give me more hp and better gas milage right ?
Also if I take my oil cap off when its running it stalls is it supposed to do this?

Sorry for all the questions but I've never owned a car that stalls from things like these.....

sounds like the diaphram you are referring to is your VAF. That's the air meter the KL engines came with. You're pretty much stuck with it without going stand alone or megasquirt.

yah actually just drill holes in it see how that works:)

Inside my intake I have a plasit diaphram thing that moves when the engine is reved, when it is idling I push the diaphram back and it stalls. Is it supposed to do this?
Yes. Sounds like you're describing the Volume Airflow Sensor (VAF). It stalls at idle when ya open the flap because you're increasing air intake without increasing fuel intake = stall.

If I install a cai will i still need the diaphram to prevent it from stalling or is it something to do with my ecu like reseting it when i put th new intake in?
You'll still need it. The CAI increases the air intake capability but ya still need to have your engine sensing that air intake stream and adjusting automatically to match fuel rate.

The cai is supposed to give me more hp and better gas milage right?
Maybe a couple ponies but more like an increase in throttle responsiveness and a nice powerband seat-of-the-pants increase, especially from 2000+ rpm to 4500 rpm. Mileage basically unchanged although if your driving habits change to punch the throttle a bit to take advantage of the mod, mileage could decrease a bit.

Also if I take my oil cap off when its running it stalls is it supposed to do this?
Yes.

Sorry for all the questions but I've never owned a car that stalls from things like these.....
Try this link for some great engine tutorials. Clearly explained with animated illustration. Still use it myself sometimes. http://auto.howstuffworks.com/engine.htm

thanx so much for your info and for replying extremely fast