Where did the concept of wearing a red string come from? I have heard different opinions ranging from "you should definitely wear it" to "its forbidden like idol worship" - who is right?
Per Tosefta Shabbos 7 it is a prohibited pagan practice. Radak Yeshayahu 41 also prohibits wearing a red string. The Rambam in Moreh Nevuchim 3:37 says that it causes misfortune.
However the Minhag Yisroel Torah Yoreh Deah 179, and Be'er Moshe 8:36 indicate that it is an accepted practice to ward off an evil eye.
Harav Musafi quotes his father, Harav Salman Musafi and Harav Shelomo Zalman Aurbuch who prohibit.
It is likely drawn from the superstitious Indian practice:
To any indian:what does the red thread worn on the wrist mean?
A "Kalava" is the sacred Hindu thread also called 'mauli' in hindi. It is worn while performing Hindu rituals like Yajna or Puja. It is tied by a priest on the wrists of all the people attending the prayer ceremony. Kalava is tied on right hand of males and unmarried females, and on left hand of married females. Sometimes it has small yellow parts in between the mostly red string. It sometimes has knots which are tied up while reciting Sanskrit mantras to invoke God and is worn to ward off evil from the person who wears this red thread.
It spread to Judaism and was adopted by superstitious people, just as it was back in the times of the Tosefta (see other answer).