Like most Flyer 3/16ths O models, the 565 has a worm gear drive, not a spur gear drive so there's no gears cast into the side of the wheels like Marx engines (with their gear teeth so deep, they don't tend to like Lionel 0-27 switches), and a couple of the early Flyer 3/16ths O models (806 UP Northern and 564 NYC Hudson). I have a small fleet of prewar 3/16ths O gauge Flyer, and aside from the wheelbase of the 572 UP Northern being a tad long for 0-22 switches (it would go through with some lean at sane operating speeds - Flyer used wider radius curved track and switches than Lionel's 0-31 track), the engines navigate 0-31 switches and curves ok. 0-27 switches might be a bit sharp to navigate, although on the small wheelbase Reading engine that shouldn't be too much of a problem. The Flyer worm drive wheels are narrower than typical Lionel wheels, so they might not have enough tread area to navigate the Lionel 0-27 curve on the switches.
I'd check the gauge of the wheels as a starting point. The tender needs a weight in it as it's lightweight without one (I've come across 565s with the tender weight missing). You can also check the tender's trucks for bent axles, or sideframes that may have been pushed in slightly - that might account for some wheel drag and lifting going through curved track.