FWIW, I've put the MTH smoke unit in the semi-scale K-Line locomotives. It's a pretty tight fit, but it does go in there. 
I'm curious, if you are feeding the chuff from one side of the switch and the motor from the other side, are the chuffs in sync with the smoke? I found it interesting that it always stopped with smoke at idle, nice trick. 
FWIW, this one is still listed as available at Lionel, looks like the same mechanical fit as yours. You seem to have one of the "smart" smoke units with the 5-pin connector. I use the "dumb" ones like below for my conversions, I already have the board for the "smarts".
