Make sure the plunger is going all the way down so the pawl can engage the teeth on the drum. Check the drum in the 'E'-unit and see if the nubs on the ends of the drum are intact and the drum is able to rotate. Many times the nubs are broken, and the drum jams in the mechanism, locking the engine in one direction, like you are experiencing.
The drum is replaceable, but you need a special spreading tool to get the drum out. While apart, check the contact finger assemblies and replace them if they are worn or bent out of shape.
Here is a link to 'E"-units and sevicing.
The Train Tender has replacement drums and other 'E'-unit parts.
Larry