Well, there's no joy in Mudville.
But to review the situation. From the manual:
This signal has a somewhat unusual hookup for a 3-wire device. Two wires (Yellow and Black) go to AC Accessory Power (12-18V AC). The 3rd wire (Green) is normally connected to Yellow (AC hot) when no train is present. The signal should be green when untriggered. So you disconnect Green from Yellow and the signal should turn Red. This is backwards from the insulated-rail method but that's a separate discussion that is interesting but I think not germane to the matter at hand.
Anyway, you re-connect Green to Yellow (train passes) and signal turns Yellow...then delay...then Green. BUT. As reported, the signal never turns to Green. It will turn to Red when triggered. It will turn back to Yellow when un-triggered...but again never to Green no matter the delay. Lather, rinse, repeat.
I cannot find any assembly errors. It is/was indeed sloppy soldering but I could not find any solder shorts, bridges, etc. The 100K trimpot is functional. The only other interesting behavior is when initially powering up in the untriggered condition, it will sometimes go right to Yellow and of course just stay at Yellow; it then just goes between Yellow and Red when triggering or untriggering.
I have fired up the oscilloscope to see what the analog time delay voltage signal is doing (presumably controlled by the trimpot). It would be nice to have a working board to compare to, but one must make do with what one has!
From what I can tell, the board itself is No Longer Available from Lionel. Plus, I was struck by how small it is. Yes, it has to fit in the base of the signal...but it would still be difficult for the average guy to replace with tiny wires going everywhere connecting to random locations on the circuit board...some wires connecting on top, others on bottom.
I sketched out a schematic which I'll post later though it really doesn't tell you much since all the magic is going on under the Blob which is of course the end-of-the-road (aka dead-end).
Any comments welcomed...especially if you too have a broken CPS. Did it "fail" as described above? Was it something that happened over time or out-of-the-box? I have my suspicion about what causes this but all observations add to the collective knowledge. Remember guys, this is a discussion forum for the common good; I just find this aspect of the hobby interesting and an end-in-itself!