It sounds like a decoder setting. Here's a link to the manual
I see something in CV51 and 52 that say FX hyperlight. Maybe it's that or something in the other cv's that will fix it.
http://www.soundtraxx.com/manuals/lc_techref.pdf
Springfield PA
After doing a quick scan of the manual I see the decoder has a dimable light feature. I'm sure others will chime in but to me it looks like you might need a higher value resistor. When in full brightness the voltage to the bulb might be a little too high.
After searching some more here's someone using LED's with that decoder
The value of resistor they note doesn't match the picture though. The picture shows a 750 ohm which is close to yours.
http://www.trainbuddy.com/Reference/Decoding%20Engines/Sound/Kato%20SD90.htm
Also here's a soundtrax application guide which notes using 1k resistors which once again is close to your value.. Their example is hooking up to an LED
http://www.soundtraxx.com/documents/appnotes/katoac4400.pdf
820 ohm seems a bit high to use with 12v bulbs. If anything, the light should be dim. 1/4 watt is also probably too small, perhaps it overheated and failed, although typically a resistor would fail open, not in a short-like condition.
Not sure on this one, unless maybe one of the connections was touching the chassis or a pickup wire somewhere.
--Randy
Modeling the Reading Railroad in the 1950's
Visit my web site at www.readingeastpenn.com for construction updates, DCC Info, and more.
You need to know the current rating for the bulbs to calculate the correct resistor. All 1.5 volt bulbs are not created equal. 15ma and 30ma are common ratings. For 15ma 1.5 volt bulbs, assuming 12 volts at the function output, a 680 ohm resistor would be closer, if over 12 volts, 820 ohms would be the choice.