The conventional nonlinear optical loop mirror (NOLM) is known to suffer from control pulse power induced crosstalk that may give a substantial receiver sensitivity penalty, Here, we compare the conventional NOLM with a polarization independent propagation diversity NOLM which is shown to not give this penalty. When demultiplexing 40 to 10 Gb/s, the conventional NOLM gave 6,5-dB penalty while the propagation diversity NOLM gave only 0.7-dB penalty in agreement with a simple theory.