A system (10) which enables targeting of an instrument placed within a drill bushing (40) aligns the axis (32) of a drill bushing with the axis of a transverse hole (28) in an intramedullary nail (22). The system includes a probe (12) having an elongated member (20) with a distal end, a magnet (24) that is polarized along its longitudinal axis that is mounted perpendicularly to the distal end of the elongated member and a processor (314) executing programmed instructions to determine a position and orientation of the magnetic sensor array (328) with respect to the targeting magnet.
