A fellow in my club had Tony's Train Exchange install a Micro Tsunami in his. I'll second the recommendation of a Tsunami.
Yes, it can. I have one. I first had a motor decoder only installed in the boiler. When I saved up enough money, I had my hobby shop (Enginehouse Services in Green Bay) install a sound decoder in the tender. At the time, the only sound decoder to fit was a Lok Sound. While it is okay, I've head that Tsunami's are better. I believe they now have one that will fit inside this loco's tender.
Contact Litchfield Station (http://www.litchfieldstation.com/DCC-University/index.htm). If it can be done they can do it. Good people, service and prices. And I'm just a satisfied customer.
Good luck!
This is the only N scale I have that is DC. I was wondering if this one can be installed with a sound decoder?It would be nice if it can be done.Thanks.