Biglou,
First, do not open the engine unless the following doesn't resolve the problem. Please read on...
It's possible that the engine originally had a 5 volt PS2 board which failed and was replaced with a 3 volt PS2 board. That would account for the 2.4 volt battery appearing to be "jury-rigged" into the engine.
It's also possible, since you appear to be operating conventionally with an MTH infrared (stick-shaped) remote control, that the battery is the issue..
If the above is true, it's possible that the battery, which is very important when operating conventionally, is simply too weak to operate the engine properly.
Since everything about this engine's genesis is suspect, I'd avoid using a battery charging port, if this early PS2 engine even has one, since it's unknown if the port is the correct one for the battery or even connected to the 2.4 battery. Therefore, I suggest that you proceed as follows.
First turn off the engine's smoke. The switch should be on the tender or, perhaps, the engine (if you have the engine's manual you can check). Then place the engine on the track and turn up power to 12-15 volts or so. Let the engine sit for at least 4 hours and see if things improve.
Good luck!
