There are a couple disadvantages of non participant observation. One of which is "Hawthorne effect" if people know they are being observed. The other is you are unable to get as much information because you are not part of the group.
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1: The researcher can become influenced the group uner study so there are chances that his research might be in their favor or prejudiced against them.
It also depends where the researcher is overt or covert, the disadvantages will be different for them.
If the observer is doing overt participant observation, then the group under study might alter or modify there behaviour accordingly, as people just do not act normal if they know they are being observed. This is known as the Hawthorne Effect. Therefore, the research will be invalid.
Moreover, if identity of the researcher is revealed then there could be serious consequences for them.
If the researcher is engaged in covert participant observation, then there comes in the problem of ethics as you are deceiving the group by not telling them the true purpose of your research.
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The strength of a non-participant observation is that it is easier to record data promptly and objectively. It is also less demanding than participant observation as the participant do not have to be involved.
Narrative observations are often used to record information on children- allowing them to be in their natural environment and thus less likely to be influenced by the researchers. Although the are a lot of positive aspects to this method of research, it doesn't come without it's shortfalls such as giving an incomplete picture of the child's being. Many narrative observations are done based on memory so often, important details can be left out and thereby allow an incorrect diagnosis due to a lapse in memory over the exact occurrence.
Participant observation depends on the participant's sincerity and concentration in his or her work, so that a participant's observation can be questionable and less trust able.