A simple yet versatile non-contact optical inspection instrument and method are described for measuring the height and width of defects and contaminants on a magnetic disk surface. The instrument includes a sensor which produces an illumination beam that is modulated and then focused normally on the disk surface as a spot. The illumination spot is Doppler shifted due to the movement of the disk and the diffusely reflected light is interfered with a reference beam produced by the sensor's illumination optics. The sensor uses two collection optics channels which simultaneously detect both the specular reflected light and the diffuse scattered light produced by the disk surface. The phase shift of the specular reflected light and that of the diffusely scattered light are measured. The output signals from the sensors are processed to estimate the size and type of the defects. Another aspect of the present invention includes a demodulator which increases the frequency of an FM signal. Pulses representing the zero-crossings of the signal are generated and filtered to provide a voltage that is proportional to the frequency of the FM signal. Because the pulse train has a frequency that is significantly greater than the input frequency, a low-pass filter with both a high cut-off frequency and a gradual roll-off in frequency response may thus be used to optimize the output or demodulated signal in terms of increased bandwidth or faster response and more linear group delay.