I use Atlas and peco code 80 #4's and #6's on my layout. I had the shorting problem and the nailpolish worked like a charm. I also was able to change the speed that the empire builder responds to a short from 1/8th of a second to 1/2 of a second so an offending wheel can pass the frog before the unit detects the short. I also have a problem with locos equiped with MRC sound decoders that i don't have with other locos. They stall on the switches without making a short circuit or will also stall on straight track for no apparent reason even if they are in a consist or running alone. The decoders may not have a keep alive circuit to propel them over a short area of dirty track like the other decoder equiped locos or it just may not be working. The longest loco's i have are atlas B 23-7's and the shortest is an atlas MP 15. All of them work well since i started with the nailpolish except the sound equiped loco's. I hate to bash MRC but.
I know exactly what you are going through, its extremely frustrating, and I had the same issues with n scale atlas turnouts ( code 55 ). I had to redo alot of my track, and im not the greatest at track work just yet. What i did was replaced the code 55 with code 80, its a little easier to work with and theres room for more error. I also changed my turnouts to peco electofrog, i used the insulfrogs before and that was alot of my problems i personally think n scale locomotives arn't large enough to overcome the gaps around the turnouts. Physically they look as though they will be fine but it only takes a small gap or a peice of track that is slightly unlevel and the wheels break contact and the loco stalls. However knowing all this and after changing my track i still have intermitten problems but they are much easier to deal with than before. So going over your track work with a fine tooth comb would be my first recomendation and if that is good consetrate on the turnouts, possibly switching to electrofrog there are no dead spots like the insulated frog just make sure you isolate the frog legs with insulated rail joiners. Also if you dont allready soldering railjoiners is a must.
With the track turned off push the offending engine through the turnout to see where it's shorting.
Use a track gauge to make sure clearances are in order.
The problem is usually at the frog where the 2 sides converge. I've had issues with atlas turnouts but usually was able to fix them 2 ways.
1. use a small screwdriver and place it at the frog and twist to separate the rails just a littls.
2. use a dremel to make the gap at the rail junction just a bit larger.
Here's a pic with the arrow pointing to the usual offending spot. This turnout has a nice wide gap.
Springfield PA
I am having trouble with some N scale DCC equiped engines shorting out or stalling on my Pecco #6 turnouts. These are sound equiped diesels or short wheel base diesels like the 44 Tonner. I tried the nail polish trick on the insul frogs without success. Anyone know any tricks that might solve the problem?