In fiber-optic interferometers with laser frequency modulation, carrier phase delay and accompanied optical intensity modulation (AOIM) in phase-generated-carrier (PGC) demodulation inevitably produce nonlinear errors that can seriously hamper displacement measurement accuracy. As for the existing improved PGC scheme, they are only capable to compensate for one of these effects. As the only method that is effective in eliminating the two effects simultaneously, typical ellipse fitting methods require target movements λlaser/4, and fail when the PGC carrier phase delay is proximate to certain values (e.g., nπ +π/4, nπ +π/2). Herein, a modified nonlinear-error correction method for errors due to PGC carrier phase delay and AOIM is proposed. Active laser-wavelength scanning by constant variation of the laser drive temperature is used to replace the target movement. A fiber-optic Michelson interferometer is constructed and experiments are performed to verify the feasibility of the proposed method. The experimental results show that after correction, the nonlinear error is reduced to less than 1nm, and nanoscale displacement measurement is achieved.