This paper develops a robust fault detection and isolation (FDI) and fault-tolerant control (FTC) structure for distributed processes modeled by nonlinear parabolic partial differential equations (PDEs) with control constraints, time-varying uncertain variables, and a finite number of sensors that transmit their data over a communication network. The network imposes limitations on the accuracy of the output measurements used for diagnosis and control purposes that need to be accounted for in the design methodology. To facilitate the controller synthesis and fault diagnosis tasks, a finite-dimensional system that captures the dominant dynamic modes of the PDE is initially derived and transformed into a form where each dominant mode is excited directly by only one actuator. A robustly stabilizing bounded output feedback controller is then designed for each dominant mode by combining a bounded Lyapunov-based robust state feedback controller with a state estimation scheme that relies on the available output measurements to provide estimates of the dominant modes. The controller synthesis procedure facilitates the derivation of: (1) an explicit characterization of the fault-free behavior of each mode in terms of a time-varying bound on the dissipation rate of the corresponding Lyapunov function, which accounts for the uncertainty and networkinduced measurement errors and (2) an explicit characterization of the robust stability region where constraint satisfaction and robustness with respect to uncertainty and measurement errors are guaranteed. Using the fault-free Lyapunov dissipation bounds as thresholds for FDI, the detection and isolation of faults in a given actuator are accomplished by monitoring the evolution of the dominant modes within the stability region and declaring a fault when the threshold is breached. The effects of network-induced measurement errors are mitigated by confining the FDI region to an appropriate subset of the stability region and enlarging the FDI residual thresholds appropriately. It is shown that these safeguards can be tightened or relaxed by proper selection of the sensor spatial configuration. Finally, the implementation of the networked FDI-FTC architecture on the infinite-dimensional system is discussed and the proposed methodology is demonstrated using a diffusion-reaction process example.