A couple things come to mind now that it runs a couple laps before causing the transformer to report a short.
First - wires short after being moved around as the engine goes around the loop.
Second - a thermal caused problem. Motor armature coil heats up, wires expand slightly, as two windings short, causing high current draw, eventually tripping thermal breaker in transformer.
Third - you mentioned that with motor installed, wheels were extremely difficult to turn in one direction, but very easy in the other direction. If you have the motor wired now to run in the direction the wheels are extremely difficult to turn, motor could be drawing a lot of current to move, thus overheating thermal breaker. If you have the wiring in the hard to turn direction, redo wiring so motor turns in opposite direction and see if problem goes away. @TrainLarry mentioned that the difficult turning is related to the gears changing relationship to each other based on turn direction - I have also found that if the armature moves up/down a lot based on direction, gears jam in one direction, not the other. I have a gangcar that was missing a BB type bearing at the top of the armature, causing gears to jam in one direction, free in the other.