Optical tracking systems are extensively used in minimally invasive image-guided surgeries. The efficiency of such a system depends on the precise tracking of surgical tools. The optimal setup of the navigation system and calibration of the tool are the predominant factors that affect the tracking accuracy. We have developed and implemented customized filtering and calibration algorithms on a cost-effective camera, the fusionTrack 500 manufactured by Atracsys. Deployment of these in-house algorithms and protocols have shown a significant increase in the tracking accuracy. Extensive validations were conducted on fusionTrack 500 and benchmarked against NDI Polaris Vega, an industrial standard camera. ASTM phantom was used to validate the tracking accuracy of the navigation system. A Deldrin-based phantom was designed particularly to evaluate the Target Registration Error. Further, a volumetric study was carried out to assess the relative position error between cameras, using a 3D FARO arm CMM. The proposed calibration method implemented on the Atracsys camera shows a 33.7% improvement in the tracking accuracy compared to its native algorithm. Target Registration Error for NDI camera was observed to be 1.2 mm and Atracsys was 0.8 mm, which depicts a 0.4 mm enhancement. Incorporating these algorithms would allow us to effectively integrate cost-effective optical tracking systems into image-guided navigation systems.