Phasing: power up the layout and both TIU outputs. No trains started up Take a multimeter set on AC voltmeter. Place one probe on the red output of FIXED 1 and the other on the red output of FIXED 2. If you show any voltage > or so, such as around 35+volts, the phasing is wrong. If close to 0, you're fine.
Insulated section: I assume both TIU outputs red are connected to the center rail. If not, they should be. Place a fiber pin in the center rail of the track connecting the loops. The DCS signal is fed through the wires from each red output to the center rail of that loop. The loco doesn't know when it goes from one to another, and neither will you if both are powered on. You didn't mention what switches or track you are using, so I can't be more specific.
You don't take out the center rail. You merely put a break in it so current from the center rail in one loop can't get to the center rail of the other.
