You have to "Divide and Conquer" the loop in order to find this.
- As Bill DeBrooke said above, step one is to disconnect the wires from the transformer and see what happens.
- If the transformer still shows a short with the wires disconnected, the transformer is defective.
- If the transformer is OK, reconnect the wires to the transformer.
- Remove all locomotives and cars from the track.
- Apply power. If there is now no short, the problem is in one of the pieces of equipment that was on the track.
- Place them back on the track, one at a time, until you find the one that has the short.
- If you still have a short with nothing on the track, you have to do the "divide and conquer" routine.
- Take two track joints apart to split the loop in half.
- Apply power to each half of the loop, one at a time.
- One section will show the short, one section won't.
- Take two track joints apart to split the loop again.
- Apply power to each half of the loop, one section at a time.
- One section will show the short, one section won't.
- Carefully inspect the section that shows the short and locate the defect.
- DONE!