I first tried isolating both the hot and the ground rails on the 2nd half of the loop, as well as just isolating the center rail.
Both times, as a locomotive approached the cut in the rail it stuttered, made it across the cut, jumped fwd before then popped the breaker on the 2nd channel transformer.

I put together the above crude schematic in hopes for a simple explanation of what should be isolated where.
The layout is generally a simple layout, albeit large around the perimeter of my apt, along with a siding area that is successfully blocked and functioning.
Just using track lock-ons that are attached either directly to the TIU or via a terminal block.
Thanks in advance.