I thought I'd reply to my own problem since I solved it over a year ago. I purchased a pair of roller pickups that were narrower than what was on the locomotive origionally,and I haven't had that problem since.
The 6-65168 027(42") switches are notorious for this exact issue. You already have done the sleuthing - the arc spots on the switches are the problem - with many locos & rolling stock types.
Wherever the arc spots are, cover them with a strip of electrical tape and test your engine again. This should eliminate the shorts. You can keep changing the tape as it wears, or get more creative and use clear/silver/black nail polish with a brush, or the "plasti-dip" type material to insulate the "hot spots".
Rob
Your guess (the pickup shorting to a grounded rail in the turnout) could certainly be right. Has happened to me many times.
A lamp connected between an outer and the middle rail will dim when there is a short present (indicator light on the transformer should, too).
Try to get visual confirmation of the problem: when the engine stops, turn off the power, lift one side off the track and see if you can tell where the roller pickups have landed.
the only O-27 turnouts I have are 27" diameter, so yours may be different, but on mine, the points (the movable part) are made of a single metal plate with the edges turned up. This plate rocks from side to side: when the weight of the engine's wheels are pressing down on one point, the other lifts up like a seesaw. It might even lift up high enough to touch the roller pickup momentarily, so check for that, too.
I have insulated parts of a turnout that roller pickups were shorting against with nail polish. Works well but has to be re-applied every so often. The color is up to you
Have you cleaned the track, especially the switches, the pick=up rollers on the engine and the engine's wheels? This is frequently the problem. If that doesn't work check that one of the pick-ups hasn't become disconnected electrically. Use a continuity tester or lay the engine on its back and use the transformer to bench test the individual pick-ups.
Have you tried running your T-1 engine on 042 O gauge track and switches? I am not 100% positive but I think that the Reading (4-8-4) T-1 by Lionel was designed for use with O gauge track.
Another posibble way to run it on 027 track is to install a secondary pick-up wire from a freight or passenger car behiond the engine from the center rail pick-up roller.
FYI, I have a Reading T-1 made by MTH that doesn't like Gargraves switches, so it could be the switches in question. The T-1 I have needs 042 curves and has an extreme hang-over on curves.
Lee F.
My T-1 stalls out when going over a switch. It makes the E- unit go into neutral when it goes over most of the switches on the layout. I have noticed that there are sparks flying off the wheels when this happens,and there are some burn spots on the center pickup on the rail as well as the open switch blade which is near the center rail when the switch is in the straight thru position. I am wondering if the roller pickups on the engine are catching both the center rail and the open blade when it rolles across it. The open blade is the same polarity as the outside rails. The engine runs just fine on normal track,(no switches). I use all 027 gauge track on the layout. The switches are 042 radius. I am stumped.
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