DCS will run conventional locos. So will Legacy/TMCC. You just need a Powermaster or TPC300/400 for Lionel's systems.
Yes, I do know that both systems (I have both) will operate the conventional items I have (probably about half a dozen or so in Army livery, from Weaver, K-Line, and Lionel), but for the most part I tend to prefer running with command control most of the time. Several of the conventional units I have can certainly be upgraded to command control, but the very smallest ones will likely have to remain conventional. That's still fine with me because I can still operate them from time to time.
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