Microwave nondestructive testing and evaluation (NDT&E) has tremendous potential for defect detection in metallic materials. In this paper: 1) an open-ended waveguide-based scanning system operating in the X-band (8.2-12.4 GHz) with a spatial-frequency feature extraction algorithm for defect detection at large lift-offs is presented; 2) a full mathematical derivation for modeling the spatial-frequency characteristics in the presence of defects and without defects is provided; and 3) a spatial-frequency feature extraction algorithm using the Itakura-Saito nonnegative matrix factorization is developed and investigated. The algorithm has the unique property of scale-invariance, which enables extraction of spatial-frequency features that are ch...