There are two different contact plates that could be used with the semaphore, the 153C with three connections and the 145C with two connections. The instruction sheet that Rob provided shows the connections for the 145C. Lionel maybe confusing things by using one of the contacts terminals as a junction point for two wires. If the signal is connected to a 153C and the three wires go to the three terminals, it will operate exactly as you describe. On the 153C only two terminals are used to operate the semaphore. To operate the semaphore a power wire from the transformer needs to go to the track trip and one to the semaphore. The track trip turns on the power to the coil that makes the blade move. The second power wire goes to the terminal on the signal that lights the lamp. That wire should be on continuously.
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