I could fill paragraphs with my disdain for NC annual inspections revenue enhancements.
The pre-96 vehicles are exempt from the emissions portion of the inspection because they don't have OBD systems installed. Everything after that has an OBD with an interface port that the shop connects to the diagnostic computer. They used to use a tail pipe sniffer to read the emission content, but now the "sniffer" is built right into your car from the factory, along with who knows what else.
So, yes, if your Check Engine light is on, you'll fail the test. My light is always on because it detects a leak in the evap system. This has no bearing on the performance of the car, it's strictly environmental horse sh1t. When fumes come off the fuel in your tank, rather than escaping into the atmosphere they are absorbed into a canister filled with charcoal. When the engine is running, it sucks the fumes back out of the charcoal and burns them. My canister has a leak somewhere. Replacing it requires dropping the fuel tank, as it was ingeniously placed above it solely to confound people like us who prefer to be self-sufficient. Instead I have left it alone, and each year I play the game of trying to get the inspection after a) resetting the check engine light and b) before the fault condition trips it back on. To further compound things, when you reset the fault code, that in itself triggers another code (a "Recently Reset") code that will also cause it to fail inspection. So I have to reset it, drive around long enough for it to give me permission to try for an inspection, and hopefully hit the window of time just right before the light has come back on.
The futility of the whole system becomes apparent if you live and commute in Charlotte, where half of the metro area is in South Carolina. They have no inspections in SC, and some of the junk heaps from there don't even have a single functioning tail light. So I get to jump through all the hoops while 1/4 or more of the cars around the city come in from SC.
The proximity does have its advantages too. I haven't bought gasoline in NC in months.