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@Granpa49 we are glad to have you with us!
Most likely one of the windings is touching something it shouldn't internally. It would probably be best to find a replacement for the 60+ year old transformer, since who knows what is inside the housing. A short or fire are both real possibilities for it, and those transformers are inexpensive enough to not take the chance.
That is great advice from a true expert.
Finding a good used one should not be too hard
Also, good advice.
I take it they are not servicable.
They are, but it can be a complex task best left to someone with experience. Professionals can refurbish them, though their services aren’t cheap. Still, the sentimental value is something you can’t overlook.
If you’re looking to buy a replacement,
avoid modern transformers from Lionel or MTH. They’ve switched to electronic controls, using Triodes for alternating current and microprocessors to vary voltage. Instead of a smooth sine‑wave AC output, these produce a chopped wave AC. While modern trains are designed for this, older models, particularly those built before 1970, aren’t as well equipped for it.
Chopped wave transformers have steeper voltage edges, producing more heat in coils. They deliver the same approximate RMS voltage, but with sharper edges and more harmonic content. That rougher waveform can make older motors: Buzz more, run warmer particularly at low to medium speeds and sometimes cause the E‑unit/reverser to chatter or misbehave. In the worst cases, they can lead to catastrophic failures.
Mid to late Post-War trains early 1950s to 1969 (I assume yours is a
Marx Allstate 9625 Southern Pacific Electric Train Set - (~1961 or so, possibly earlier) are not usually as vulnerable. But I still would be concerned with premature failures due to the increased heat over the long term.
My best recommendation would be finding a replacement transformer. You can always look for a good used Marx transformer or Lionel made before the year 2000. They are not too hard to find on eBay or train shows. Some have been refurbished by professionals and are certified to work and to be safe to use.
Here are a few specific options, but any true sinewave 50-watt AC hobby transformer will do:
Lionel AC1803000 O Hobby Train Transformer 77W w/ Speed Controller
Model Rectifier Corp (MRC) MRC AH501 Pure Power AC Transformer,130-Watts, Fixed 14VAC Output Terminals, Horn/Whistle and Bell Buttons.
MRC AH601 O Pure Power Dual AC Train Control (270 Watts) Transformer with Horn/Whistle and Bell Buttons.
This is an MRC AH601 O Pure Power Dual AC Train Control (270 Watts). Each side of this AC transformer offers 7 amps of power and 0~21 VAC of smooth, realistic variable control. Just like the Pure Power single but with twice the output, the Pure Power Dual Control runs all AC powered trains and...
www.trainz.com
MTH Z‑4000 is a 400‑watt, UL‑listed, dual‑throttle, true sine‑wave AC transformer. The Z‑4000 is widely regarded as the best modern true‑sine‑wave transformer ever produced for pre and post war O‑gauge trains. The Z‑4000 is no longer in active production, but it remains highly sought after and is readily available on the secondhand market.
Here is an MTH Z-4000 400 Watt Advanced Digital Transformer for MTH ProtoSounds Locomotives. Equipped with two smooth-operating, wide-range 10amp throttles to let you power two different tracks, the Z-4000 lays down up to 22 volts AC onto each track it controls. Bright LED displays monitor...
www.trainz.com
I found these through a quick internet search. I'm sure you can do better if you put more time into it.
I wish you well! If you have further questions, feel free to ask.