I slightly disagree, the transformer is doing it's job. When you trip overload for a long enough period, the Z4000 cuts both channels, and then you have to lower both handles and start again, the transformer is operating as intended (you can argue you don't like the way it works).
Narrowing this down now. The issue is track #2. When I repower track number one there's no problem. But when I begin to power up track number two I immediately getting overload red blinking light. There are no deralments.
Question: should I have insulating pins on my center power and/or common rails on my 4 way Ross switch? That's the only spot I can see where power from Track 1 and 2 might be shorting out.
Yes, you should have insulating pins, however because both are in phase from the same transformer- it should NOT cause a short circuit/ overload. EDIT- for clarity, what I'm saying is you would see the channels bonded together (might call that shorted) but not cause an overload indication- just when raising one handle the meter displays both channels rising voltage.
Again, you should not parallel 2 outputs of a Z4000, I agree with that 100%, however, if it does happen, it just looks like voltage bleed from one to the other channel and the voltmeter of both channels will show this happening.
What we have here is a true short or miswiring on the track, or some other condition shorting that output.
Testing:
#1 remove the wiring from the transformer on the offending channel (2) and raise the handle. If the transformer is still overloading then the short is internal (probably a failed shorted MOSFET on the powerboard). If it doesn't show overload and varies- then you have a real load short somewhere in wiring or track.