Both tracks coming of the turnout need BOTH rails isolated. You need a power terminal  for each loop lactated within the loop. You'll also need a power terminal on the point end of each turnout as well. Any DCC auto reverser will work. make sure the loops are longer then the longest train you will run. The train has to be shorter then the distance between the gaps in the rails.  DCC Specialties makes auto reversers that are electronic rather then using relays. It's the OG-AR.  The relays can burn out over time.   Joe

http://www.dccspecialties.com/products/onguard.htm

I hope nobody gets "BENT" over your photos!  Looks good though.  Joe

 If you have the Dynamis, it uses an infrared signal which is a line of sight signal. You can buy a receiver but I don't know how many you can add. You will also need the pro box to do this. NCE and Digitrax have wireless throttles that use radio waves. I use Digitrax . NCE and Digitrax seem to be the top 2 DCC systems.  Joe

http://shop.bachmanntrains.com/index.php?main_page=product_info&cPath=264_274&products_id=1820

http://shop.bachmanntrains.com/index.php?main_page=product_info&cPath=264_274&products_id=1818

 This video is for a GP38. I think it has a similar frame as the GP40. Take of the fuel tank to see if there is room for a speaker in it. That way you wont have to mill the frame.  Joe

http://www.modeltrainstuff.com/GP40-GP40X-GP40-2-Locomotives-HO-Scale-s/1568.htm?searching=Y&sort=3&cat=1568&show=30&page=1&brand=Bachmann

 Or try here.  Joe
http://www.modeltrainstuff.com/GP40-GP40X-GP40-2-Locomotives-HO-Scale-s/1568.htm?searching=Y&sort=3&cat=1568&show=30&page=1&brand=Bachmann

 What model?  There might be videos out there on you tube. Google installing a sound decoder on an HO scale Bachmann XXXX(Model).        Joe

 Just make sure the gaps in reverse loops are longer then the longest train you intend to run. If not you will run into trouble. I suggest getting an electronic version of the auto reverser. The ones that use a relay will burn out over time. I went through 2 before going to the electronic one.  Joe

If you want DCC only, NCE makes a decoder for the Bachmann DCC loco's that should work on this loco. It replaces the PC board.   Joe
https://ncedcc.zendesk.com/hc/en-us/articles/200945019-BACH-DSL

https://www.youtube.com/watch?v=IHvK6JEjNqQ
youtube video. Note the frame was milled down to make room for a speaker. You could put a smaller speaker in and mill the frame less.   Joe

Are you going to use DC or DCC ? If DCC the track still needs to be isolated but you use an auto reverser instead of a switch. The reverser works automatically to reverse polarity. There are several brands of DC auto reversers.   Joe

 Walthers shows November 30th as when available. I'm sure this is an estimate as things change in production.  Joe

http://estore.bachmanntrains.com/index.php?main_page=index&cPath=66_68_86&sort=20a&page=8

look here.  Joe

Look at the tender shell from the 2-8-0. The tender looks the same as the one for the light mountain.
I use paint remover from Scale Coat. Isopropyl alcohol will work as well. Wet the lettering you want removed for about a minute and it should come off using a cotton swab. You may have to do it several times.  Joe

Deleting the address that way deletes the address from the DCC system. It doesn't change the address of the decoder. Try the reset using programing on the main.  You may have to take all locos off the track except the one you want to program. Soundtraxx decoders can be hard to program addresses on.  If I recall, you have to change from a 2 digit address to a 4 digit address then back to a 2 digit address  or 4 digit to a 2 digit then 4 digit. You can't go from one 2 digit address to a different 2 digit address, or a 4 digit address to a different 4 digit address.  My friend has an MRC system and I usually get called to bring mine over(Digitrax DB150) to change the addresses on his locos.  Joe 

How did you "delete" the loco address?   Joe