I just bought a brand new Legacy Lionmaster Challenger and when I power up, it operates in conventional mode. It is not running in Legacy. The locomotive is not getting the signal from the base. How do I fix this situation?
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The antenna (handrails on steamers) is the likely culprit. The antenna should be independent of the loco's chassis ground. You can test this with a multimeter - should show no connection. The antenna connection to the circuit board may be disconnected and you'll have to open up the loco to check this. Also check that the receiver board is firmly seated in its socket.
Does the loco respond to programming the TMCC ID?
It isn't responding to anything. I power it up expecting lights and silence but the sound comes on and the speed is controlled by the transformer. And a couple of times the rear light blinks real fast and looked really weird. This stinks because there is ALWAYS an issue when I buy a locomotive online. This is a brand new locomotive, but obviously NOS. I'm not confident, nor am I experienced with tinkering under the hood of O scale locomotives so this thing will probably go back. Would a factory reset do the trick?
No factory reset for that issue, something is amiss. Of course, the actual Lionel product number would help with more targeted advice. 
The actual electronics used will have a bearing on what might be steps to try to resolve the issue.
6-11200 is the model number. Being that I am not you, someone who really knows everything about what is under the hood of model trains, I think I'm going to be sending it back. I don't know if anyone agrees with me, but Lionel and MTH locomotives are not boxed to protect the locomotive from the shipping and handling process. Anyone agree?
Here is something weird. In "RUN" and "PROG", the locomotive lights up, the railsounds start, and it runs in conventional mode??? Help???
It appears that the issue is either the antenna or the R4LC. However, any further diagnosis would require opening it up. Since this is an 11-12 year old engine, there's a good chance that reseating the boards in the locomotive would likely revive it.
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Hello John. I appreciate your response, as I am sure that you remember that I consider you a Jedi when it comes to all this. You have NO idea how much I wish you were my next door neighbor. I'm going to try what you said. Wish me luck.
Chris
Perhaps at least a Jedi in training. 
I took the shell off, and I honestly can't see anything wrong. I see circuit boards and wires that I'm not entirely sure as to what they do. I see the wires going to the antennae, and they look good. Motors look good. When you say "reseat", what exactly do you mean John.? I am taking pictures now. I will upload them soon.
I am talking about the R4LC, just wiggle it on it's pins and then make sure it's 100% seated on the motherboard connector.
Hey Christian....I think that you already have your answer when you wrote, "Here is something weird. In "RUN" and "PROG", the locomotive lights up, the railsounds start, and it runs in conventional mode???" Did you first program your engine with an engine number? Your engine WILL start and run in Legacy without because ALL engines are programmed as "engine one" at the Lionel factory...and it should "run under Legacy control" once you slide the switch from "program" to "run"!! Are you forgetting to switch back to run when trying to use Legacy?
BTW...I think most OGR Forumites wish we all lived closer together, so that we can help each other....yet, the Forum is the next best thing...PLUS...if we were invited over, I would probably drink ALL your scotch and get Cheetos orange dust all over your dog from petting him/her...nah....lol
Keep messaging...the Cavalry is near and we are many, and we'll answer..
