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I had the same issue with a modern starter set 4-4-2. I don't think lionel made these to go through older o-27 switches. I think its an issue with weight. I built a layout with two o-27 switches for a reversing loop for my nephew. I tested with my PW 2035 and modern Lionel 18639, both heavy. Worked fine. I unvailed the layout with the starter set 4-4-2 I bought my nephew for Christmas last year...total disaster! It derailed every time switchs were thrown in either direction. It seems the front truck lifted up over the switch point as its too light. Maybe adding some lead tape may help.

 

It may also have something to do with front trucks period. To resolve my issue I bought a PRR 0-8-0 rated for 27. It's much heavier. Just tested it last weekend. It derails going through the one switch in one direction, not the other. Really frustrating.

Adam, sometimes the sheet metal assembly that is screwed into the steam engine shell and holds the front truck via a pin, needs a slight bend downward towards the track.

 

Older production 4-4-2's just have a pin holding the truck. Newer ones have a spring.

 

There's another trick that has worked for me, if you want to try this one first before attempting the bend ... place a small round or rectangular magnet on the front end of the piot truck.

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