Abstract: In an incremental encoder signal processing system there is provided a pair of sensor/encoders adapted to generate a quadrature pair of analog positioning signals that are converted to digital signals and processed to produce a digital position vector and a digital error signal. The digital position vector is processed in a novel logic analyzer to determine if sequential position vectors are indicative of an invalid change of state. The digital position vector signal is filtered in a novel low pass digital filter and the before-and-after signals at a plurality of states of the digital filter are analyzed and compared to detect conditions which permit the system to produce optimum rates of change in the servo-controller which controls a servo-drive at optimum speeds without creating error conditions and to detect error conditions in the sensor/encoder.