I have the same layout and have found that the turn out can not be placed directly connected to the 90 degree cross so I moved it back by one 031 curve to your left and the problem was solved. My sd 70 must have just enough of a pick up roller spacing to not make contact when going thru the curve and turn out together. For what its worth my dad had the very same problem and he fixed it by moving the turn out one track piece back from crossing.
Humm ... interesting. That's the direction that my SD70 usual works but the steam engine doesn't. Your solution should be easy enough to try when I get home if you mean that you or in this case your dad just swapped the switch with the curved track next to it. That is, going left to right the sequence is switch, curved section, 90-degree cross. Doing so won't require buying another curved section but assumes that the switch and 031 curve match length-wise.
Thanks!
Tomlinson Run Railroad
