What smoke unit did you use? I'm about to convert an MTH SP Daylight locomotive with the MTH fan driven smoke, and I was planning on something similar.
I have no problem with the 12V P/S board, just wondering how you controlled the fan. I was planning on just breaking the connection to the fan itself and controlling that with the second reed switch. I may put a single shot on it to start it momentarily with each chuff, and also have a bypass to run it at low speed all the time to avoid cooking the wick.
The only thing that comes to mind with the directional lighting is that you need a load resistor on the lamp outputs to get correct operation if you're using LED lighting. I use a 470 ohm resistor across the outputs in that case. If the directional lighting doesn't work with incandescent bulbs, I'd say call ERR, the cruise commander is pretty simple in that regard. Oh, one other thing. The light outputs from the R2LC are negative in respect to frame ground, that is also a factor with LED lighting.
BTW, the URL in your signature doesn't work.