I have been fooling around with a $2 digital sound recorder from All Electronics and have found that it is a very inexpensive way to add sounds to my layout. The recorder will record for up to 30 seconds, there is a built in microphone and the quality is acceptable. On the left of the cube there is a record button. Hold the button down to record, when you release the button the recording will stop. On the right is a play button, Whether you press it once or hold it down, the recording will play to the end. You will get a better recording if you remove the microphone and dangle it outside the box. If you leave it inside, you will hear a click as the record button is pressed. The built in 1" speaker is adequate for HO or N. For O gauge and more volume, I replaced it with a $1.25, 2" speaker from All Electronics. The box measures 2 1/4 x 2 1/4 x 1 1/4 after the ugly figure is removed. On my HO layout I fit the box inside a small Amtrak station. I soldered 2 wires in parallel with the play button and ran the wires to a momentary switch on my control panel. All electronics also sells very tiny magnetic reed switches that are only 1/2" long. Add a small magnet to the engines and you can have automatic triggering of horn, whistle or crossing bell sounds. On my O gauge layout I plan on running the play switch wires to the relay that controls my crossing flashers and gate. If you search the internet you can find sound files for free that include diesel horn, steam whistle, crossing bell, trolley bell, church bells and many others. Play the sounds on your computer and hold the microphone of the recorder near your speakers and start recording. I have plans for several of these on my layouts in the future, but here are some photos of my progress so far.
http://www.allelectronics.com/make-a-store/item/SAW-3/SAW-3-DIGITAL-VOICE-RECORDER/1.html
http://www.allelectronics.com/