A short across the driver shouldn't have damaged the driver but may have damaged the LED.
The area next to the engine house is adjacent to some yard switches. Maybe a switch tower could go there. I agree with Yard buildings in and along the yard. If you have room, maybe a long skinny REA warehouse. An icing station might fit in a long skinny area but might not fit your layout's timeframe. Diesel fueling station along side the yard tracks is another possibility. Just some thoughts. Maybe they will spark an idea.
