Power would be distributed to the lights and to the drive motor from a simple circuit board or distribution module. If the lights are on...at all...then the pickup is complete and sufficient for what the locomotive is designed to do.
Lights on = pickup from at least two tires, each on opposite rails.
As Randy suggests, there's a bad solder, broken solder, broken wire, or perhaps even a bad motor. It it's the gears, disengage the motor coupling and run the loco back and forth. If it runs freely, it may be the gear tower...or a split axle gear, or a bound motor.
Are all the wheels making proper contact with the rails? If not, then the loco may not be getting all the power it needs to make the motor turn over. I don't have this particular model, so I'm just taking a guess since I don't know how it's pickups are wired up. Another thought would be that it just doesn't like the section of track you tested it on for some reason. Have you tried it on a different section of track? If all else fails, I'd call or email Walthers about it and see what they think.
That the lights turn on indicates power is coming in through the wheels and pickups. Either there is a wire loose to the motor, which somehow makes contact when the loco is turned upside down, or thee is a drivetrain issue where the gears are jamming but flipping it upside down releases whatever is binding.
--Randy
Modeling the Reading Railroad in the 1950's
Visit my web site at www.readingeastpenn.com for construction updates, DCC Info, and more.
If it runs when you touch the wheels with alligator clips, then check your track. Are all wheels sitting on the track? Is the track clean? Is the track getting power? Can you test it with a volt meter?
Just got a new CSX gevo thats DCC ready. Tried running it on my layout (I have a couple Bachmann and Athearn locomotives that work.) The lights turn on, but the motors won't run. The Power pack I use is an old 18 volt DC pack probably from the 70s or 80s. All my other locomotives are modern, some DCC equipped that all run fine using this powerpack. Thought it was an issue with the locomotive, but when I touched the alligator clips from the pack directly to the wheels they ran fine. I'm not very experienced with the electronics behind model railroading, any advice?