Let's see if we can eliminate the track as a source of your problems.
Take the train off the track.
Disconnect the transformer from the track.
Set a multimeter to ohms or resistance.
One lead to the center rail, the other lead to one of the running rails. You should have zero conductivity (very high or infinite ohms). If you are showing some value, you likely have at least one piece of track with an insulating problem. Break the loop in half and retest. Keep breaking the track apart until you find the offending section(s). Tedious, but necessary.
Also, inspect the track joints. They need to be tight to minimize electrical resistance at the joints.
Clean the track, even if it looks clean. Do NOT use Goo Gone!!!
If everything checks okay with the track, then the engine is next.