The red light would illuminate when there was a short circuit on one of the two circuits in this unit. The Green light is a power on indication. If I remember correctly, the faceplate shows two ranges of voltage possible as you rotate the knob. At the end of the range, there is a designation like " A-C" which tells you the terminal post pair that will deliver that voltage range. The terminal posts on the back of the transformer would be marked as " A'. "B", etc. If you use the post pair corresponding to the voltage range you want on the transformer faceplate, thats the range that will be delivered to the track and controlled by that dial.
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