It sounds like your turnout and power triggers are in the wrong places. The trigger that activates the waiting train, changes the inbound/outbound turnouts, and deactivates the arriving train should be activated by the arriving train once it's far enough into the siding to have cleared the entrance turnout. The waiting (now outbound) train should be clear of the outbound siding before it hits the trigger to reset the inbound/outbound turnouts. When it returns to its siding, it should hit a trigger that activates the original train, sending it through the properly-aligned outbound turnout. When it returns, the cycle repeats.
I'm assuming from your description that this is conventional operation with locked direction on the locomotives.
Also keep in mind that high speed can screw this up if the train coasts for a longer distance when the power is interrupted.
