Yeah, that's strange.
Are you still in the warranty period? Put the call in and get on record. You can ship it after the holidays.
The LionChief are a pain for repairs. It's only the one main board. Lionel usually replaces the engine.
if it has a smoke off switch, try turning it off. That could possibly eliminate a smoke element that has failed.
Just strange that it gets put away ok and comes out with problem.