I responded to Steve's suggestion by putting electrical tape under the the DZ-1002. This had no effect on the problem.
Here is Dennis Zander's feedback: "Try disconnecting the GREEN and YELLOW wires. It sounds like one of them is shorted to common."
So I disconnected both and the wires for the non-derailing feature. Not surprisingly, the switch did not throw under the train. Then I hooked up the yellow, but not the associated non-derailing wire. No problems, but I can only throw the switch one way. Then I hooked up the green, but not the associated non-derailing wire. The switch did not throw under the train. I did not observe bounce back, but I didn't throw it that many times.
The problem seems to be the wires for the non-derailing feature. More to come...
