I see, so placing it by anything metallic doesn't do anything. (Nor does moving it by anything metallic... to get a changing magnetic field?)
Looks like i'll have to make the device a bit more complicated. Perhaps wrapping the string around a hollow tube of plastic (like a straw) and placing a tube magnet in that straw. The magnet can be held in place by springs at either end. Then when an end of the "straw" is placed near something metal the magnet will move...possibly lighting the LED (gotta figure out the current and voltage and possibly AC/DC issues). I guess a voltmeter can help me with that. The greater the magnetic field disturbance the greater the current correct?
I understand that in this description above, the LED won't stay lit but only for the amount of time it takes for the magnet to move a bit. It's just a first idea. I'll sit and think about this.