Step 1: Recall projection formula.
The projection of vector $\vec{a}$ on vector $\vec{b}$ is given by:
\[
\text{Projection} = \frac{\vec{a} \cdot \vec{b}}{|\vec{b}|}
\]
Step 2: Identify vectors.
\[
\vec{a} = \hat{i} - \hat{j}, \vec{b} = \hat{i} + \hat{j}
\]
Step 3: Compute dot product.
\[
\vec{a} \cdot \vec{b} = (1)(1) + (-1)(1) = 1 - 1 = 0
\]
Step 4: Apply formula.
\[
\text{Projection} = \frac{0}{|\vec{b}|} = 0
\]
Step 5: Conclusion.
The projection is $0$, hence the correct answer is (D).