I took apart a voice modulator system and wanted to incorporate it
into my Darth Vader helmet; however, it is giving me feedback because
of the close proximity of the bare mic and speaker.  I heard that
aluminum foil can be used as a damper... Is that ture?  If not, are
there any possible way to eliminate the feedback?

Generally, a piece of fibreglass insulation covered with aluminum foil
makes a good sound insulator. You might want to provide more details
about the geometry of your system.

Feedback eliminator circuits operate by dampening the specific
frequencies associated with the feedback and tend to be specific to
application.  You could eliminate the feedback by putting a low pass
filter in line with the speaker.

Alternatively put the speaker in your chest piece - who says the sound
has to come from the mask?