It has been proposed that the infrared absorption spectra of diatomic molecules in simple liquids should exhibit effects of the collective excitations of liquid. On the other hand, it was suggested that the absorption line shapes for the H2-Ar system are essentially determined by the diffusive motion of the hydrogen impurity. We have made a detailed study of the H2-Ar system and find that both effects must be included to accurately describe the S1 (1) vibrational absorption line shape. Numerical calculations based on a model that does not include diffusive effects yield a line of the right qualitative shape, but that is narrower than the observed line. Extension of the model to include these diffusive effects leads to a line shape in good agreement with experiment.