Thank you again for all the information Guys! This is also taking me on a trip dowm memory lane.
Here's a little more information to try to help nail this down even more:
My parents kept a record book of every "major" purchase they ever made. From their log: Our American Flyer was pruchased in November or December, 1957.
For . . . $37.50.
So, that puts my set right at the 1957/1958 transition that many of you mentioned. That doesn't help with identifying it . . .
Also, we had a local hobby store; but, we also had a hardware store that had a huge inventory of trains only around Christmas. So, I'll assume this could have been a new 1958 set, or a 1957 set from last year's inventory.
More info:
I remember the pair of switches were in a red/white box. I believe some or all of the track was also in red/white boxes. I do not know if all the cars were in blue/yellow boxes.
I do not know if the extra cars were purchased at the same time, or later. I would think "later" because $37.50 was a fortune to Mom & Dad in 1957. The picture shows we had them all (at least) by January 1960.
MTN: You are probably right about Dad buying the Lionel TW because the Flyer transformer probably couldn't handle the extra track or cars. I attached one of the full pictures at the end of this. It shows my brother using a black American Flyer transformer in the 1960 picture. Good Call! That also leads me to believe Dad initially bought a set.
AmFlyer: Good catch on the different platforms. I'll explain that in a minute. Yes. Ours had a single switch controller with 2 switches. We had an inside figure eight (some years). Dad built the control box. On the left is a white fuse holder, a white power (household 120 volt) switch with a red lamp next to it. The 3 buttons were for the rocket launcher car and the whistling billboard. I don't remember what the 3rd button was. I'll assume an uncoupler but I don't remember ever using an uncoupler. The brown household switches on the right were to turn on the lights he put in the O27 Plasticville buildings and the Christmas Tree lights. I loved the whistling billboard! I have 2 different versions on my current layout. Also, you are correct. It was not a bay window caboose.
Plastic engine? That surprises me. I am definitely not saying you're wrong. It just surprises me.
Okay, at this point I must announce:
"Forgive me people, for I have sinned."
Apparently (or so I am told) around the age of 5-6, I said I wanted HO.
I know, I know, I know. . .
Dad bought someone else's existing HO platform and trains. The 1965 pictures are the 3/4" plywood, HO platform, cut down to fit on top of our homasote platform. It came with painted roads, glued-down grass and dirt, and HO Plasticville. The 1965 pictures show the HO on the inside and our American Flyer running on the outside loop. Sometime after those pictures, Dad sold the Flyer. A very, very sad memory indeed.