So JohnActon, do I understand you lowered the K-Line tender but not the engine?
They both appear lower in your picture. I would think lowering the engine would be difficult as the motor driver leaves no space between the shell and the frame.
To install a Cruise M in that engine which is about 1/8" longer than the DCDR it comes with requires a bit a surgery on the heat sink and repositioning of that board.
Replacing the K-Line boards with Lionel's newer RCDR and BEMC boards or RCMC as the new engine likely has might allow lowering the engine though.
Pete