Stiffness sensing and palpation are essential for understanding object properties, including tissue health and fruit ripeness. Currently, there is limited research on using soft-tipped sensors for stiffness sensing and dynamic palpation. To address these challenges, we investigate how the pressure modulated optical tracking (PMOT) sensor can use compliance control to quantify tissue stiffness and detect margins in samples through dynamic palpation. Results show that the PMOT sensor modulus of elasticity sensing range is from 4.20 kPa up to 177.62 kPa. Across all untrained samples, elasticity was measured with a rootmean-square error (RMSE) of 7.72%. Further, it is shown that the sensor can locate margins between 13.4 kPa and embedded 29.3 kPa materials during palpation. When mounted on a linear rail, averaged for the direction of travel, the sensor's signal-tonoise ratio (SNR) was up to 39.5:1. Participants used the sensor to locate embedded margins in a teleoperation environment with visual feedback. This was achieved with an accuracy of 96.5%.