Theoretical and computational models of reading have traditionally been informed by specific characteristics of disabled readers. One of the most frequently studied marker effects of developmental dyslexia is the nonword-reading deficit. Disabled readers are generally believed to show a specific problem in reading nonwords. This study presents a survey of frequently cited methods used to examine this effect by controlling general reading ability in various ways. An extensive analysis, however, shows that the majority of these methods (grade equivalents scores, the reading-level match design, and interactions in a chronological-age match design) actually fail to account for confounding variables such as age and general slowing, potentially affecting the conclusions reached. To alleviate this problem, an alternative method is presented: i.e. state trace analysis. Applying this method in a sample of Dutch disabled and typical readers, the results revealed an absence of a nonword-reading deficit in the disabled readers. Furthermore, after controlling for their decoding ability, disabled readers showed inferior word reading performance, which strongly suggests that the fundamental problem of disabled readers does not relate to the reading of nonwords but concerns their (dis)ability to acquire orthographic (word-specific) knowledge. Further, predictions for disabled readers in an inconsistent orthography like English are formulated. Finally, based on a review of neurobiological studies, implications for theories of reading disability are discussed. (Contains 9 figures and 2 tables.)