Well I must say I appreciate all the help here. This one had me stumped but I fixed it, here's how.
I simply noticed that when the locomotive stalled, a slight push to one side, and I mean slight, brought power back again. Someone said to check for this a while back in the thread. I shimmed the switches with two pieces of cardboard and it is fixed.
I will find some black shim material and replace the cardboard.
Obviously something is breaking ground when the locomotive moves through the two switches. It stops at the same spot every time to with a millimeter. The only thing I can think of is the trucks are pivoted just right within the rails to stop the contact. As is only happens in reverse I am still stumped. As it only happens at slow speed it makes sense because the dead spot is so small I can momentum through it.
Thanks for all the help...was a tough two days on the railroad.