'1011' Overlapping (Mealy) Sequence Detector in Verilog

The error is caused by mixing the combinational State assignment block with the sequential output block. The combinational state assignment block and the sequential output block have different sensitivity lists.

Following these guidelines helped me design glitch-gree FSMs.

1. Sequential blocks use nonblocking assignments.
2. Combinational blocks use blocking assignments.
3. It's better to use registered outputs.
4. Use combinational logic for the state assignment block

Link to the design on EDA Playground

Design:

`timescale 1ns / 1ps

 module seq_detector(
 input x,clk,reset,
 output reg z
 );

 parameter S0 = 0 , S1 = 1 , S2 = 2 , S3 = 3 ;
 reg [1:0] PS,NS ;

 //sequential state register block
 always @ (posedge clk or posedge reset)
   if (reset)
     PS <= S0;  
   else
     PS <= NS;
   
 //sequential output block
 always @ (posedge clk or posedge reset)
   if (reset)
     z <= 1'b0;
   else
     z <= (PS == S3) && x;
 
 //combinational state assignment block  
 always @ (*)
  begin
    case(PS)
        S0 : NS = x ? S1 : S0 ;
        S1 : NS = x ? S1 : S2 ;
        S2 : NS = x ? S3 : S0 ;
        S3 : NS = x ? S1 : S2 ;
    endcase
  $monitor(PS);
  end
  
 endmodule

Testbench:

`timescale 1ns / 1ps

 module testbench;
 // Inputs
 reg x;
 reg clk;
 reg reset;
 // Outputs
 wire z;
 // Instantiate the Unit Under Test (UUT)
 seq_detector uut (
    .x(x), 
    .clk(clk), 
    .reset(reset), 
    .z(z)
);



always #5 clk = ~ clk;  

initial begin
$dumpfile("dump.vcd");
$dumpvars(1, testbench);
fork 
    clk = 1'b0;
    reset = 1'b1;
    #15 reset = 1'b0;
begin  
    #12 x = 0;#10 x = 0 ; #10 x = 1 ; #10 x = 0 ;
    #12 x = 1;#10 x = 1 ; #10 x = 0 ; #10 x = 1 ;
    #12 x = 1;#10 x = 0 ; #10 x = 0 ; #10 x = 1 ;
    #12 x = 0;#10 x = 1 ; #10 x = 1 ; #10 x = 0 ;
    #10 $finish;
end
join   
end  
endmodule

Waveform: https://www.edaplayground.com/w/x/3Pj