Make sure the engine is wired correctly. Here is a wiring diagram for older American Flyer locos.
http://www.portlines.com/images/steamwiring.jpg
The top diagram for locos with 4 wires is the one you need.

If the engine still does not run, isolate the motor, and wire the motor manually as follows:
   Disconnect the 4 wire plug from the tender to the loco.
   Unsolder the wires to the smoke unit.
   
The motor wires to the plug from left to right:
         1- Field #1
         2- Brush #1
         3- Field #2
         4- Brush #2
  Hook one transformer lead to one brush.
  Use a jumper wire to connect the other brush to one field wire.
  Hook the other transformer lead to the other field wire.

Apply power, and the motor should run.
Reverse the wiring to the brushes, and the motor should run in the opposite direction.

If the motor runs this way, but not with the reverse unit hooked up (put the plug back in), chances are the reverse unit is in need of service.


Larry