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All:  I called Lionel warranty support and asked if Lionel provides warranty on trains purchased from Amazon, and without question they do and she named several other stores like Walmart where they also provide warranty service.  But the Hobby stores in my area, Northern Chicago suburbs suggest sending the engine to Lionel rather than repair it themselves on warranty.  One store told me it would be a lot faster to send it to Lionel.  Currently, Lionel is sending me an email with the RA number to be included when I send the engine and tender.  I am pretty good at repairing things myself and ordered and installed a new smoke unit from Lionel, but that didn't fix the problem.  The person on the warranty call pointed out that if I did something to damage the unit I would have to pay to fix it.  I agree with that policy, but am anxious to see if they come back with some reason I have to pay.  It's not the money, it's the fact that it's a starter engine and not worth more that $100.

This is the last update to this question on the non smoking 0-8-0 engine.  I sent it to Lionel after discussing it with them and getting a RA number.  They fixed it in two days and returned it well packed.  It runs better than ever.  It doesn't click or hesitate when engaging the smoke unit and it smokes like crazy.  Lionel was very cooperative on the warranty claim.  They didn't question that I bought it at Amazon or the fact that I had opened the engine to repair the smoke unit myself.

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