I removed all Lionel engines, (7), plus a sound car from the system. I left the passenger cars and two cabooses with smoke on the lay out. Same problem in the same corner of the layout. Are we back to my original questions?
Maybe.
However, first, remove the cabooses and passenger cars as well. Some cabooses (Atlas, for example) and passenger cars (Golden Gate Depot, for example), also disrupt the DCS signal.