Steve, could it cause a voltage drop if one connects the transformer's common to the insulated rail, and could that voltage drop be eliminated by doing what you recommend, which is connecting the common wire to the other outside rail that's not insulated? Arnold
Arthur, I'm net entirely sure what you're asking, maybe some more specifics about where the voltage drop you're proposing is occurring.
However, if the transformer's Common is only connected to the insulated rail and not to any other track or other Common bus feeding the track, then yes there could be a noticeable voltage drop on the whole track. In fact, unless there is some other electrical path for Common to reach the main outside rails, the only way in this scenario there would be any voltage on the main part of the track (outside the insulated section, is when a train car is sitting on the insulated track section completing the electrical circuit from the transformer to the insulated rail through the train wheels/axles to the primary outside rail. Even this would cause some voltage drop because of the resistance between the track and wheels. How much voltage drop would depend upon how clean the wheels and track are, among other things.
Also, if the connections from 1) transformer Common to the main Outer Rail and 2) insulated rail to Accessory common are swapped with each other, weird things can happen.
IMO, it's best to connect the Transformer Common to the main outside rail. Is there some benefit to connecting things the other way around that I'm overlooking?