This patent document discusses assemblies and methods for remotely detecting a position of a surgical instrument in the presence of a magnetic field. In varying examples, a position detection system includes an encoder coupled to move in concert with the instrument. The encoder includes an a translucent substrate and light blocking indicia disposed thereon. A light source and a light detector array are effectively disposed outside of the magnetic field. Light from the light source is carried to an encoder first side using an input optical fiber, while the light passing through the encoder is received at an encoder second side by an output optical fiber. The light received by the output optical fiber is transmitted to the light detector array, which converts the received light to position representative electrical signals. Such signals are subsequently transmitted to a control module adapted to formulate and convey a position of the instrument.