Richard, at least we're getting somewhere with things electrical.
If you wire up your house lighting, street lights, whatever doesn't need a constant source of higher voltage, like traffic lights or crossing signals, the way I described, you'll have a parallel circuit. Connecting that bus wire to the variable output of a power pack and running them at just a bright enough level to look good will make those bulbs last forever. If you run them at a constant 12 volts, they'll burn out within a few months and, believe me, pulling up structures to replace bulbs isn't fun. Some things, like street lights, don't even have replaceable bulbs, so making them last as long as possible will save a lot of money and frustration. I have two big older MRC standard DC powerpacks plus my DCC controller. The only thing the DCC controller does is run trains. One has the lighting bus hooked up to it and the other has the DC lights that need a constant 12 volts. It also powers the things that need AC, like switch motors. I'm running over 110 bulbs on my lighting powerpack. Using a separate powerpack for things that need a momentary high current, like switch machines, does away with other lighting dimming when you throw a switch.
The Atlas switch controllers are, to be charitable, junk. They are poorly made and that slide switch collects junk under them in nothing flat. It's really a lot better to get a piece of 1/4 inch plywood and mount quality toggle switches in it. You can then label each switch and tell at a glance of a switch is thrown in the right direction for your next train. You can build a cabinet for the plywood control panel to sit on and have the wires hidden in the cabinet. This is called a control panel. As you get further along with the hobby, you can even wire up LED's that show the direction of the switch (green if lined for the main and red if lined for the diverging route) and put lines between the switches using drafting tape to show the layout schematically if you want it look really spiffy. Do a search here for control panels for ideas.
In general, don't use WD-40 anywhere on the layout. It's a petroleum based lubricant and it leaves behind a film that doesn't conduct electricity well and serves as a focus for gunk build up on your tracks and rolling stock wheels. It can also damage plastic, as Larry pointed out. I use contact cleaner, also available at Radio Shack. It has a Teflon based lubricant and improves electrical contact for your witches and your track in general.
Switches that have points that don't open and close properly are almost always caused by ballast being stuck under the area where the points move. You need to get right down to track level and watch what happens, You will be able to see where the points are sticking so you can dig out whatever foreign matter collected beneath them. Once you have everything cleaned out, the switches should move in response to the electrical switch. I spray my switches with a little contact cleaner every few months. It helps the points to move more reliably and improves electrical conductivity, so you have less problems with short wheel base locomotives not stall on a switch.
How old are your engines? If they are less than five years old, they probably don't need any additional lubrication. The gears and most of the drive train is made from engineering plastic, which is very slippery. The biggest problems I've seen are with over lubricating. If you do feel that an engine isn't running as well as it did when it was new, a few drops of dextron type automatic transmission fluid in the gear boxes will usually set things right. AT fluid will work fine and is a lot more cost effective than the little tubes of grease and oil that cost you $10.