I had this happen to a new engine (Factory Default #1) where the slot for engine #1 was already occupied by a Legacy locomotive. No amount of retries helped. DCS signal was 10 and other locomotives (whose I.D. # was not 1) could be added with no problem.
I added the locomotive to my handheld with no issue (which changed the I.D. # to new number that was not already in my DCS handheld or phone).
I was then was able to add it to the phone immediately and run it with the Wifi Ap. This was repeatable with another locomotive with a factory identity of 1 (couldn't add the new locomotive as long as it had the I.D. # of 1).
This might be similar to JINI5 experience (above) if, when he added the engine to the handheld, it changed the I.D. number.