From the photo, it looks like the first and third wheelsets don't have the rod attachment in the same relative position (quartering). I can't see the middle one. That could be the problem. As to the bearing blocks not seating, that's part of the mis-alignment. They WILL come out of position without the bottom plate in place simply because the drivers are not aligned properly. Even if they're properly aligned, they will raise slightly, without the bottom plate in position. Follow Ron's advice and position them all in the 6 o'clock position and make sure that once the bearing blocks are seated, they're STILL in the 6 o'clock position (nothing magical about 6 o'clock, it's just easiest to determine by eye)
I know it takes time, but remove all the side rods and see if everything turns without binding. That will tell you for sure that the wheels aren't positioned correctly. On AM steamers, the side rods are for show only since the gearing does the powering of all axles. If he rods are connected to the wheels, they fight the gears and binding will occur.
If it binds without the rods, you have a different problem. Are all the gear teeth solid? Are there teeth missing? It's extremely rare, but it does happen, especially on some diesels.
As to any damage to the DCC if you back feed it, I'd not take the chance. Disconnect one wire from the motor, and power it directly if you chose to.
If my advice works, I just saved you $50 (plus shipping). I hope it does! 
