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We demultiplex 100-Gb/s words using a two-wavelength nonlinear optical loop mirror (NOLM) with polarization sensitivity <0.5 dB obtained by using fiber twisted at eight turns/m. This polarization insensitive demultiplexer is more suitable than conventional nontwisted fiber NOLM's for use in high-speed all-optical networks where the input states of polarization are arbitrary. The demultiplexer consists of synchronized erbium-doped fiber lasers, a 100-Gb/s fixed word encoder, and a NOLM using 450 m of twisted fiber with /spl lambda//sub 0/=1518 mn. For inputs of arbitrary polarization, we measure a/spl sim/5.5-ps timing window and contrast ratio >15 dB. To understand the improvement in performance of the system due to the polarization insensitivity, we apply a statistical method of measuring the Q for the twisted and nontwisted fiber demultiplexers. The Q of /spl sim/15 for the twisted fiber NOLM is improved over that of the NOLM with nontwisted fiber (Q/spl sim/10), and is consistent with an increased minimum nonlinear transmission.