Issues with New PS1 Engine

Sounds like a battery issue that needs to be charged first. If it's been sitting around for a long time that's the first thing I would address. 

Ps1 is very old so this engine sat a long time. 

If it is truely new and never have been run it certainly needs a new battery before running. A BCR would be a better choice than a fresh battery.

You can buy batteries from Harbor freight cheap and put them in every year. Then you will keep your locos running good and not have to pay to get fixed. Also by doing this you can see if things like wires are not rubbing against anything and screws are tight. save money and tine just but a new battery every year and charge before installing, you can get chargers cheap too.

Doug, The head light is a 1.5V constant voltage light powered of the board.  Dummy units have 18V track powered lights so they will be brighter at some track voltage level.

The plug may be loose in the board.

You do want a good battery.  Raise voltage to 12V or so and let the engine start up.  Lower voltage to about 10V or less.  At that point you can press the direction button.

Some transformer that are not pure sine wave can give operational issues.  G

Install a BCR and let it warm up for 60 seconds. Just remember your NEW engine is at least 15 years old. As PS originated in 2000

For all of you talking about the battery, I installed a new battery as soon as I got it home.  GGG's solution to the direction changing problem worked, but the problem with the rear truck is still bad.  I looked at it a bit more closely and realized that the blind wheels on the rear truck are turning too far on curves and are then dropping down and rubbing along the ties.  Is there a fix for this?

Are the blind wheels gaged to O-scale track?  Are those hole elongated too much from Wear?

I would see what the difference was between rear and front.  Picture might help.  G

Like GGG said, you must be at less than 10 volts to cycle a PS-1 locomotive.  As for the light, seems silly to ask, but is it a MARS light?  I did check the manual, but it doesn't say.  If it's random, then I'd say the bulb is going bad and needs to be replaced.  The bulb can be orientated in such a manner that when the filament breaks, it can swing around and still make contact with the other side and light up.