With a properly operating reverse unit, when you turn the transformer power on and off, the locomotive will sequence Forward, Neutral, Reverse, Neutral, etc. The clicking sound you hear is the reverse unit sequencing-this is normal. One position of the reverse unit lever will lock the reverse unit in its' current mode so the locomotive will not sequence. The opposite position will allow the locomotive to sequence every time power is interrupted.

The first step now is to clean all the wheels and the track with naphtha, and polish with a fine ScotchBrite pad any minor corrosion or rust. The locomotive should now be disassembled, the motor disassembled, cleaned and lubed. The gearbox should have any old grease cleaned out and replaced with new grease. The axle bearings need a few drops of oil on each one. Naphtha again is the perfect cleaner/degreaser for the entire loco and motor. Once the locomotive is completely overhauled, it can be put back on the track and hooked up to the tender. It should run properly. If it does not run, or runs poorly, the reverse unit may need to be inspected. That is another job in itself.
Get the loco serviced, and see what happens. A word of advice: take photos of the process as you disassemble anything. They will be invaluable in the reassembly procedure when you get sidetracked and 'don't remember where this part goes'.

Larry