In the Name of Allah, most Compassionate, most Merciful

Allah is the only protector of man, to seek another protector is shirk. However, the following authentic hadiths prove that talismans to guard against the evil eye and illness were permitted and encouraged by the Prophet P.B.U.H.  

Yahya related to me from Malik from Yahya ibn Said from Amra bint Abd ar-Rahman that Abu Bakr as-Siddiq visited Aisha while she had a complaint and a Jewish woman was writing a talisman for her. Abu Bakr said, "Write it for her from the Book of Allah." [Al-Muwatta Hadith 50.11]

Therefore, Aisha had an illness and a talisman was used to cure it.  It wasn't necessary for a 'holy' person' 'clean' person or a even a 'Muslim' to make it.  What was important was it was the words of Quran written on it and nothing else.  No symbols, no lines, no strange unreadable language, only Quranic ayats.

Although not the only method, the Companions (R) of the Prophet (P.B.U.H) used talismans for aiding against illness' also...

Yahya related to me from Malik from Nafi that Abdullah ibn Umar cauterized for the palsy and he had a talisman made for a scorpion sting. [Al-Muwatta Hadith 50.14]

Talismans were not only used for illnesses but against the evil eye...

Yahya related to me from Malik from Yahya ibn Said from Sulayman ibn Yasar that Urwa ibn az-Zubayr told him that the Messenger of Allah, may Allah bless him and grant him peace, entered the house of Umm Salama, the wife of the Prophet, may Allah bless him and grant him peace. There was a child weeping in the house, and they told him that it was from the evil eye. Urwa said, "The Messenger of Allah, may Allah bless him and grant him peace, said, 'Why do you not find someone to make a talisman to protect it (the child) from the evil eye?' " [Al-Muwatta Hadith 50.4]

Once again a wife of the Prophet (P.B.U.H), Umm Salama (R), had this going on in her house just like his other wife Aisha!  If talismans were shirk then the Prophet (P.B.U.H) would never have recommended their usage by his companions or wives let alone have it in his houses.  

It is beneficial for all anyone suffering any illness or seeking protection from the evil eye to put up or wear a talisman. 

Not that the talisman have any supernatural properties or any power in themselves, rather that  the words of Allah are perfect and a refuge from the evil things, which are repelled by them. 

The Apostle of Allah (peace be upon him) said to teach the the following words in the case of alarm: "I seek refuge in Allah's perfect words from His anger, the evil of His servants, the evil suggestions of the devils and their presence."

The Companion Abdullah ibn Amr used to teach them (the above dua) to those of his children who had reached puberty, and he wrote them down (on some material) and hung on the child who had not reached puberty. [ Sunan of Abu-Dawood Hadith 3884 Narrated by Abdullah ibn Amr ibn al-'As]

It is clear that a talisman made of Quranic ayats written by anyone on paper or cloth and hung up or worn is not shirk. It is sunnah to use it use it to scare away all evil things especially the evil eye for adults or children.  It was recommended by the Prophet (P.B.U.H) and used by some of his closest companions and family members. 

There is no argument by the Companions about this.  However when people exceed this by say drawing pictures, lines, incantations, spells, pagan crescent moon and star symbols and other rubbish under "In the name of Allah" then clearly that is not permissible as it is an innovation.  What is allowed is ONLY Quranic verses. 

Then there are deviant sheikhs and so called 'Holy' men extorting money from poor ignorant people to write up rubbish in mumbo jumbo language and pass it off as an Islamic talisman.  There was no harm in people making their own talismans or ones for their children or having their non-Muslim slaves make them.  No one needs to pay for the words of Allah.  Unfortunately some people still like to buy and sell Quran as if it were a pre-Islamic idol in a market.

Before Islam the use of amulets was widespread.  These were knots of cloth, pieces of bone or pearls and other items.  The pagans used to believe these things would protect them from illness etc...

'Umran bin Hasin narrated that the Prophet (peace be on him) saw a man wearing a brass bracelet on his arm and he said to him "Woe to you, what is this?" He replied, "To protect me from weakness." The Prophet (peace be on him) said, Indeed, this only increases your weakness. Throw it away, for if you die wearing it, you will never attain success. (Reported by Ahmad, by Ibn Hibban in his Sahih, and by Ibn Majah without "Throw it away" to the end.) 

It is an act of shirk to wear an amulet...

'Abdullah bin Mas'ood once saw his wife wearing a knotted thread around her neck. He pulled at it and broke it, saying, "The family of 'Abdullah is free of associating anything with Allah for which He has sent no authority." Then he said, "I heard the Messenger of Allah (peace be on him) say, 'Incantations, amulets and spells are shirk.' 

There is a difference between an Islamic talisman and a Pagan amulet.  One is encouraged, while the other will take a believer out of Islam and prevent a non-muslim from entering Islam.