I’m not sure which transformer you have. Some CW-80 types are unsuitable for use with trains of your switcher’s vintage.
The fact that there’s resistance when you try to turn the wheels isn’t unusual. In fact, I don’t recommend trying to turn the wheels by hand on that loco, because you could strip the main gear which is made of a tough nylon. But you should look for carpet fuzz, pet hair, or debris lodged in the gears that connect the wheels.
I don’t know which transformer you have, or what the green light means. It could mean an overload, or it could also indicate an open circuit. Is it possible that some of your track sections have worked their way loose from fast running?
Other causes of hesitation are worn motor brushes or worn rollers that pick up current from the center rail. This would cause an open circuit, rather than a short.
