Z-4000 is pure sine wave AC. The ZW is "chopped" AC.

Rob,  that would be enough to "screw it up"?

It could be.  There have been posts concerning ZW's not playing well with PS2/3.   It's more than anecdotal at this point.   My Z-4000 was the best investment I've made recently.  Lot's a clean power and I like being able to see the voltage and amperage data.

Maybe this topic will help.  When Proto-Sound 1 was originally created by QSI, the "standard" transformer of the era was the postwar Lionel ZW.  It is a pure sine wave output, stepped down from the input line and its amplitude adjusted to that needed by the trains.  The Z4000, while different electronically, is also a pure sine wave output.  That is why your Weaver PS1 works fine with it.

QSI later made QS2+ and QS3 boards that were compatible with many chopped sine wave power supplies. Perhaps you can find a used replacement board.  FYI.

PS-1 systems were designed to run on "pure sine wave" AC. They are descendants of QSIndustries (QSI) electronic reverse and sound systems. All were designed for Lionel postwar transformers.

A ZW Controller, a CW-80, and other transformers put out a "chopped" sine wave. That works better with modern electronics. But PS-1 and QSI systems don't like it.

Some people are allergic to peanuts or lactose intolerant. They have to restrict their diets.

A QSI or a PS-1 system requires "pure sine wave" AC. "Chopped sine wave" power will indeed "screw it up." You are fortunate that Weaver SD40 fires up after repeated doses of "chopped sine wave" AC. Sooner or later a circuit or a board will "fry" and it won't work at all.

I suggest converting it to TMCC or selling / trading it for a locomotive that works with a Lionel ZW Controller.

Does anyone else remember those little shrink-tubed capacitors that were sold in the late 90's that would make PS1 locos work with Lionel's chopped sine wave power bricks?  I'm sure they are around here somewhere in a bin.  

Thank you everyone for the input.  Although I am almost 100% Lionel, I do have a few MTH engines.  I had not had any problems with them until I purchased this latest engine. It sounds like the best solution is to part with this engine and concentrate on what works. I could  convert it to TMCC but I already have enough of this type.  

Thanks again for all the knowledge that was shared.