Effective condition monitoring of machine components contributes to a safer working environment for operators and assists in averting critical machinery shutdowns. In real-world industrial scenarios, fault detection must remain simplified, user-friendly and robust despite speed variations. The operational demands of machinery frequently result in speed fluctuations, leading to spectral smearing, thereby compromising the efficiency of the analysis methodology. Furthermore, the intricacies of parameter initialisation often increase the complexity of the analysis methods. This study introduces a fault diagnosis algorithm that requires minimal initialisation and operates independently of tacho pulses. The algorithm proposed in the study incorporates variational mode extraction with the maxima tracking algorithm for instantaneous frequency estimation. Hankel matrix-based selective spectral fusion is proposed to mitigate the impact of frequency tracking errors caused by transient noise. The results of spectral side-band-based fault severity analysis, conducted on an in-house spur gearbox test-bed with seeded tooth chips, underscore the superior performance of the proposed algorithm when compared to contemporary non-stationary analysis methods.