You need to gently twist the top of the smoke stack so that it comes off, the part that is shaped like a T, and add about four or five drops of smoke fluid. Lionel smoke fluid may work better then others because of K-Line and Lionel being close in compatibility.
One other note about the K-Line smoking caboose; don't use it on tracks with TMCC or DCS command control systems, the constant 18 volts may affect wrongly.
Somebody on here may know of a modification to make it work command control constant voltages.
Lee Fritz