A method and system for performing diagnostic tests on a real-time system controlled by a state machine. A sequence of states recorded as the state machine operates is used to determine error conditions. The sequence of states is compared to expected sequences of states to determine what, if any, errors have occurred. If the real-time system, such as a transceiver in a communication system, has adaptive components, the status of the adaptive components is used to estimate the condition of any external systems coupled to the real-time system.