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Multiple-point defects and abraded surfaces in rotary machinery induce complex vibration signatures, and have a tendency to mislead defect diagnosis models. A challenging problem in machine defect diagnosis is to model and study defect signature dynamics in the case of multiple-point defects and surface abrasion. In this study, a multiple-point defect model (MPDM) that characterizes the dynamics of n-point bearing defects is proposed. MPDM is further extended to model degradation in a rotating machine as a special case of multiple-point defects. Analytical and experimental results for multiple-point defects and abrasions show that the location of the fundamental defect frequency shifts depending upon the relative location of the defects and width of the abrasive region. This variation in the defect frequency results in a degradation of the defect detection accuracy of the defect diagnostic model. Based on envelope detection analysis, a modification in existing defect diagnostic models is recommended to nullify the impact of multiple-point defects, and general abrasion in machine components.