The morphology and crystalline quality of polycrystalline diamond samples were studied by systematically varying the flowrate of nitrogen gas in the microwave plasma. A slight improvement in both crystallite size and crystalline quality is observed for a low concentration of 0.5 sccm nitrogen. With a further increase in nitrogen concentration, diamond switches from micro-crystalline (MCD) to nanocrystalline (NCD) with a nitrogen flow of 2.5 sccm (10% of methane concentration). The surface roughness of the sample is found to depend strongly on the crystallite size of the sample. Extensive spectroscopic studies have been done to understand the presence and formation of different defect complexes in diamond. The presence of nitrogen-containing defect complexes has been studied thoroughly and their concentration has been found to be limited by the solubility limit rather than the availability of reactants in the gas environment. In contrast, the effect these complexes have on the strain of the diamond film is found to be negligible. Optical emission spectroscopy (OES) of the plasma reveals the presence of C2 dimers as well as C-N radicals. However, they have little role in modifying diamond grain morphology or crystalline quality.