Is this issue limited to convential/traditional models or PS-2/PS-3 models? Thanks
That I'm not sure of. I have the conventional PS-3 model and mine has/had the grooves. The issue with the sound is it's loud, like so loud it's the only thing you hear on the layout when running. But it doesn't seem to be a fault in the system, just part of the design. I did notice once I ground down the grooves, it had a mild adverse effect, the cars seem to sway back and forth now as if the grooves were designed to keep the cars upright. Ok, so that's not a horrible thing to deal with but it does seem that MTH may have purposely made the dummy cars with grooved wheels. Also as I've never seen an original Leland, I have no idea what the cars wheels look like, maybe they had grooves as well?