ryan, I think your problem is that you have many intuitions about how sets work based on your knowledge of finite sets, and you are carrying all of them over when you think about infinite sets, but only some of them apply.
So, consider the two finite sets {2,4,6} and {1,2,3}. These are the same size because we can form a correspondence between the elements of each set: 2->1, 4->2, 6->3. But that's not the only we we can form a correspondence. We could have done 2->2, 4->3, 6->1. And in fact,
however we had tried to form the correspondence it would have worked. Conversely, with the sets {2,4,6} and {1,2},
however we try to form a correspondence we will fail - there will always be one element from the first set left over.
But when we look at infinite sets, things aren't so simple. Consider the sets {2,4,6,8,....) and {1,2,3,4,...}. i.e. the positive even numbers and the positive numbers. We can easily enough form a correspondence between them so that all elements of each set are used up: 2->1, 4->2, 6->3 etc. So they appear to be the same size. But, of course we can also try to form a correspondence and fail to match them up: 2->2, 4->4, 6->6 etc leaves all the odd numbers (i.e. an infinite number of elements) unmatched from the second set. Or we could try to match 2->2, 4->3, 6->4, 8->5 etc and leave just one element in the second set unmatched.
So here is the major difference - given two finite sets, you will either always succeed, however you try to match them, or never succeed however you try (depending on whether they are the same size or not). But with two infinite sets, even if some attempts at a correspondence fail, there still might be some which succeed. And we say two infinite sets are the same size if there exists
some way to match them up, even if other ways to try to match them fail.
So the key thing with infinite sets is not whether some attempt to match them fails (because we will always be able to do that!), but whether there is
any possible attempt which succeeds. So when you say:
But there is something paradoxical (or at least inconsistent) about the fact that we can correlate a natural number to all natural numbers and negative integers in the set Z. But, when we remove every natural number from the set Z, we are left with the rest of the negative integers. If all of the natural numbers can match up to all of the integers, why then are negative integers left when all natural numbers are removed?
, this is the point you are missing. You are looking at one of many possible failed attempts to form a correspondence (matching the positive integers with the positive integers, and not matching anything with the negative integers). But that's really irrelevant to the fact that some other correspondence does work.
In the case above, I explicitly demonstrated a correspondence which works. Given any number in either set, I could tell you the corresponding number in the other set. Cantor's diagonal argument is a standard proof by contradiction. It assumes you have made an attempt at a correspondence between the Real numbers in the interval (0,1) and the counting numbers {1,2,3...}, and then shows how, for that attempt, you can find a real number which doesn't correspond to any counting number. It's not showing that one particular correspondence will fail (because as we have seen, with infinite finding attempted correspondence which fail is always easy), it's showing why
every attempted correspondence is bound to fail.