Here is the parts view of the #303 locomotive.
https://trainrepairparts.com/diagramParts/4/american-flyer-300-series-4-4-2-atlantic-locomotive

Take it apart, and clean out all the old oil and grease with Naphtha. Clean all the wheels with Naphtha also.

Lubricate all the gears with a model train grease, and oil all bearings with a model train oil.

The reverse unit in the tender may need servicing also. See here for a tutorial on servicing them.
http://www.portlines.com/portlinesclinic23.htm

Here is a video showing general repair procedures.


This should get you on your way to getting your engine running again.

Larry