Ahh. I think I see what's going on.
The Remote Commander issues the infamous "watchdog" signal that tells an engine to powerup in command mode (silent) only 1 time when it (the Remote Commander) first receives power. As I understand your experiment, when you inserted the test wire the Remote Commander had already been powered for some time so its one-time watchdog signal came and went long ago. The engine on the siding then just gets plain power from the mainline (no watchdog) and hence starts in conventional.
So with the toggle switch (and LED) wired up try the following. Turn "on" the toggle switch...but now remove power from the mainline. Now turn on power to the mainline which will powerup the Remote Commander AND your siding together. No test wire. The Remote Commander should now send its one-time watchdog through your toggle switch to the siding. The engine should powerup silent and in command mode.
I realize this is NOT how you want to operate the siding power...but first things first!
Hope this makes sense!