We present a theoretical analysis of the noise properties in a nonlinear semiconductor optical amplifier. We concentrate on amplifiers operating as nonlinear media mediating four-wave mixing processes. We calculate error probabilities for different configurations that use four-wave mixing in all-optical signal manipulation such as frequency conversion and time domain demultiplexing. We identify a data induced nonlinear interference process as having a major adverse impact on the performance of nonlinear semiconductor optical amplifiers and propose the use of a variable decision threshold to overcome it. We compare the performance of the variable threshold to that using an optimal fixed threshold and show significant improvement in performance. We treat the cases of NRZ modulated data as well as the case of short optical pulses and demonstrate a vast advantage for the short pulses in terms of the required input field intensities and the achievable bit error rates.