The two wires being the same color concerns me - out and thru should be different colors and the rail to switch machine wire should match the color of the controller button for out and thru.
That notwithstanding, assuming it is wired correctly, perhaps the wire insulation melted a little from soldering and they are finally touching. Separate them with a small flat screwdriver in the hole.
Does the throw bar move freely or has that started to rub on something? I cannot see it in the photo - check the spring if using a DZ machine