ok in that video I notice you have nothing coming in the WTIU, just the out. Is that on purpose? That is fine if what you are doing is powering your track directly from the Transformer. What this is called is passive more and actually how I ended up wiring my unit in.
For that atlas engine, can you put in on the track closest to the WTIU connection? That will be where the signal is strongest. I would also suggest getting the voltage on the track to 18 volts to make sure the signal is strong. One other thought I would have is make sure the track and locomotive wheels are clean. Really not sure why it won't show up to add to the system, I'll have to think more about it. Maybe also double check the wires going from the WTIU to the track and make sure those connections are solid. Take that GP40 and go to the sounds "tab" in the app, at the bottom there is a "signal test" button, that will put the locomotive in signal test mode and tell you in the app what your DCS signal strength is, that might help determine if signal strength is your issue.
I do think the way MTH marketed was a little deceiving to new users since you are right, if you aren't familiar with the control systems saying it is one unit for all comes off wrong. Basically, what they are saying is you can connect through the WTIU and use their app o control Lionel engines (I believe with limited functionality). In reality it is cleaners and easier to just link both systems to the track per their instructions and use their respective apps to run their brand locomotives.