I have known this song as well. It has a catchy tune and is quite popular. It is also an example of how false doctrine gets slipped into songs. Your question about the "prayer wheel" is a case in point. Initially, a prayer wheel was a cylinder used by Tibetan Buddhists. They would write mantras, sacred texts, prayers, and attach them to the cylinder. When the wheel was turned clockwise (never anti-clockwise), it was thought to release the power in the texts and prayers. These prayer wheels can be as small as 3 inches high or as large as 20 feet, they may be set in rows, and they may be turned by water power or even electrical motors today. It acts as a mechanical aid or substitute for prayer. Just turn the wheel (or hook it up to a motor) and your prayers take off to heaven.
I also found evidence of a form of prayer wheels being used in churches. A late nineteenth century quote mentions it as being in some churches in England. Oxford English Dictionary defines this prayer wheel as a "wheel set with bells and fastened to the ceiling of a chapel, formerly used for divination in connection with masses or other devotional services." Obviously, it was a form of superstition that came into the churches.
Notice also that the song refers to a little fire burning. This probably refers to the burning of candles as a substitute for prayer--another superstition. Finally, the emphasis is on "a little talk with Jesus." I am not sure what this is, but it does not have any relationship that I can recognize with biblical references to prayer. Perhaps what we need to burn with a little fire is this song. It may be fun to sing (as I personally know myself) but it is not faithful to God's word.