Perhaps try it without tie.

#my $ref = tie *DIAG,"File::Tail",(
#    name        => $Config->{'_'}{'DIAGFILE'},
#    interval    => 1,  # wait at start
#    maxinterval => 10, # change to suit
#    adjustafter => 10  # change to suit
#);

my $fh = File::Tail->new(
  name        => $Config->{'_'}{'DIAGFILE'},
  interval    => 1,  # wait at start
  maxinterval => 10, # change to suit
  adjustafter => 10  # change to suit
);

my $restart;
#while (my $line = <DIAG>) { 
while (my $line = $fh->read) { 
  print $line;
  if ($line =~ /is higher than 5 seconds/) {
.
.
[download]

This was the log generator I use to test the script

#!perl
use strict;

my $n = 3; my $s = 10;
print "Log generator running .. $n events every $s secs .. \n";
open OUT,'>','c:/temp/diag.log' or die "$!";
select OUT; $|=1;
while (1){
  print STDOUT scalar localtime."\n";
  for (1..$n){
    print scalar localtime,"-  abc is higher than 5 seconds xyz\n";
  }
  print scalar localtime."- some other log message $_\n" for 0...rand(
+10);
  sleep($s);
}
[download]

same thing once it reach while (my $line = $fh->read) it stop. :(

Do you mean it does not read new lines as they are added to the file ?