High performance sensors and modern data logging technology with real-time telemetry facilitate system fault diagnosis in a very precise manner. Fault detection, isolation and identification in fault diagnosis systems are typical steps to analyze the root cause of failures. This systematic failure analysis provides not only useful clues to rectify the abnormal behaviors of a system, but also key information to redesign the current system for retrofit. The main barriers to effective failure analysis are: (i) the gathered data (event) logs are too large in general, and further (ii) they usually contain noise and redundant data that make precise analysis difficult. This paper therefore applies suitable pre-processing techniques to data reduction and feature extraction, and then converts the reduced data log into a new format of event sequence information. Finally the event sequence information is decoded to investigate the correlation between specific event patterns and various system faults. The efficiency of the developed pre-filtering procedure is examined with a terminal box data log of a marine diesel engine.