Talking with Lee we managed to find an interesting product that Lee then went and bought that suspends a globe (with a magnet in) above a metal base so it seemed to just hover. Unfortunately it turned out to not be an electromagnet so the idea of using that to suspend the Ferrofluid went out the window. This took us back to the plan of making an electromagnet ourselves to use that to magnetise the Ferrofluid instead.
After an hour or two we managed to make an electromagnet after a few trips to the electronics guys and Maplins. It works really well when hooked straight up to a 9V battery it managed to pick up a pair of scissors!
But we have come into a problem with getting it to work on the Arduino boards as there is too much power for the board. So tomorrow we are going to have to get some proper help on how to deal with resistors to step down the power, or even try and use a relay.