Why, in one shot do you have the green wire going from the rerailer/terminal track above the crossing to the one below the crossing, when in other pic it's not attached ? I wish I could see the terminals on your power pack, because normally a green [or black] wire and a red wire come from there to the rerailer/track-terminal. Instead it looks like you have 2 reds (color of course has nothing to do with how wires behave). But 2 reds look suspicious.
First I'd suggest you move the 'power pack' ('transformer' is for AC trains) so to be connected to the rerailer in front upper right where the curve begins and run RR from there..
And yes, you have a reverse loop causing - current to collide with + current. This is where the trouble starts.
Assuming orange diesel is running
counterclockwise, if when it comes around past inner switch track (turnout), you then throw that switch and reverse loco as if loco is now backing into it and running clockwise toward and past the coal mine around to next switch, it's right at
this switch where the polarity clash is.
There are at least 2 ways to cure this.
1) Add gaps, making complete cuts through both rails (best way is purchase Xuron Rail Nippers) right above crossing (where loco is now sitting), and both rails right at the switch at end of loop right behind engine. Then easiest, but about $45, is to buy a "Hex Frog Juicer" and follow wiring instructions. This will automatically flip the current to match current when train has gone around the mine tack and back onto the 'industrial' main'...
2) For a $3 SPDT toggle-switch you can wire it in to the mine track and simply flip the poles manually soon as engine has crossed the crossing without having to stop train. The toggle will flip the polarity to match the 'main' when re-entering it at same switch..Same gaps needed. The gaps can be kept apart by adding special plastic rail joiners in them..(If track is now nailed down, you'll have to accept the fact you will have to undo them to do this work).
If you go for the manual type I will explain the special the way the toggle posts get wired. The how-to might be in this forum somewhere, to boot..
May sound like a big confusing hassle. But once you do it you'll see how simp it really is....Mark