I don't know what to think.. Maybe try and figure out why the z-4000 is shorting out with just a simple loop in conventional mode.... No tiu.
If that works fine, try adding DCS with the TIU and see how that goes...
And I guess the last step would be hooking up DCS /TMCC using the proper cable and Lionel command base.
TMCC engine have to be added manually, Give them a name, then "D" for done and then the list of TMCC address shows up and you add the TMCC address. That's the one that you address the engine using a cab-1 . Engine will be in the inactive list. good luck.