I use a soft cloth, but I usually don't have much I wipe away.
When you put fluid in your engine try blowing a little air down the smoke stack after.
That will break up air bubbles and should reduce the residue that forms.
A paper towel and if there is a large mess, then I use a towel wet with rubbing alcohol. When putting a locomotive back into its box for storage, or shipping it somewhere, put a piece of towel into the stack to absorb any fluid that might leak out.
The times I have needed to clean off smoke fluid, I've used cotton balls and q-tips (maybe moistened with water a little, but mostly for their absorbing of the excess smoke fluid). These are very soft (won't scratch) and worked better than paper towels for me. (may depend on type of PT, I use bounty at home, and that didn't help me much for this task)
I start with a soft cloth, usually a rag terrycloth towel to wipe it off. Q-tips are good if you have some corners you can't get the towel into. I rarely need any kind of solvent or cleaning product to remove it.
I will echo the caution on Isopropyl Alcohol, or in fact any other solvent. Many of these will damage paint! I successfully wiped half the lettering off a tender with Isopropyl Alcohol in one swipe learning that lesson!
Thanks for all the inputs. I failed to mention in my first post that it is dried on the engine with dust on it. Won't come off with a cloth. I think I'll try some diluted dish soap and Q-tips and then graduate to 409 on a Q-tip and then see where we are.