I was incorrect by saying the class lights face forward only on proto 2 engine. Sorry about that. John and Dave are correct about the leds need to be adjusted by moving the leds back. I have been out of town for the past week and was able to look at my engine tonight and adjust the class lights. The wires going to the leds might be tight in the lanterns so you may need to open the front of the engine and gently pull on the wire on the inside of the engine while pushing the led back if you can. Mine were very tight in the lanterns, but I got them to move.
I did look at another forum members Southern proto 3 engine over this past weekend. As shown in the picture you posted the lanterns have clear lenses on front and sides of the class lights.