I had the same problem with the Lionel PRR N5 caboose. My solution was to drill a very small hole through the cap and the stack. I pressed small piece of round brass stock into the hole and painted the assembly flat black.
While the cap can be rotated, I don’t add smoke fluid down the stack. Instead I remove the stack from the roof. On my caboose the stack comes out easily and has a key to line it up with the roof.