Lionel 221 Engine works, but will not run on track

Sort of sounds like a pickup issue if it behaves when you apply downward pressure.  Are the pickup shoes in good shape or are they worn badly?  I assume the pickups, track and wheels are clean?  I believe it’s possible for the pickup shoes to be jammed in beyond their retainer slots in the spring that holds them in place.  Are they bound up due to something like that where they can’t make contact with the rail without you tipping it on end?  A good side Or end view while sitting on the tracks will probably be required to see this.

Does the chassis run properly on track without the shell?  When I redid a 221 there was some insulating tape on the inside to prevent contact between the shell and one of the E-unit soldering lugs.

I bet Ross is right.  Lifting the shell the motor likely falls away from it's shell and short spot by a thousandth of an inch...or ten   Give the top lugs about 3 layers of tape, or maybe resolder/bend etc. to clear better or at least not press on insulation/tape as hard.

If you are running on fastrack, use a pair of needle nose pliers and bend the sliding shoe downward slightly.

It really doesn’t sound like a short so much as it sounds like the pickups simply aren’t touching the rails.  If it was a short you’d likely be tripping your circuit breaker on the transformer which I don’t recall seeing as a symptom.  I’d give the pickups a good look while it’s on a section of track and ensure they’re even touching the rail before you dig into more involved troubleshooting.  What Chuck mentioned will probably be your best solution.

Well gentlemen, you replies gave me somethings to think about - I a took a pair of needle nose pliers and bent both pickup shoes outward slightly and the motor unit now functions properly.  The 221 now goes through the forward/neutral/reverse sequence correctly and runs without intermittent stops and reverses. Hopefully it does the same when the shell is put back on.  For those that asked the engine did not operate properly with or without the shell and it was being run exclusively on tubular track.  Thanks very much to all who replied.

Glad you got it fixed.  The 221’s are simple but nice runners.