Thought I would give you an update. I just couldn't figure out why it was running fine and then out of nowhere have this problem. I looked over the suggestions you guys gave me and tried the 'hand test' again. As soon as my hand came near the engine the headlite immediately quit flickering and the engine began responding correctly. I then started reading up on the 'ground plane' issues and figured that was it. However, the more I thought about this, I just couldn't get past why this problem would start now and not when I first got the engine.
There's allot of info out there regarding this issue, some of it directly contrary to what Lionel was providing in instructional videos. In a post from the 'Atlanta' RR Club one person noted that none of his articulated engines had this problem. This made me think it was an antenna problem associated with smaller engines.
To improve continuity between the rails and the engine I cleaned the drivers,tender wheels, and pick-up rollers with Goo-Gone. Problem completely solved.
I will say this, the whole 'ground plane' problem is really making me re-think Legacy Engines. I really like the features, the sound is excellent, detail great. But wow, this sure appears to be a huge engineering defect. Having these wires running all over the layout, what about the poor slob who upgrades to Legacy and has a completely finished layout?
Anyway- Thanks for the help
BRice