I am using the 5122 and 5121 switches and the engine keeps jumping track at the switch locations. it seems like the engine is bouncing over the switch. I am new to the hobby so any and all help is appreciated. thank you.

the switches are brand new and the engine is at least or close to 70 years old.

dave I have absolutely no idea on the track. the engine model is 1654 if that helps. the track is from the 40s and the switches are new.

Your 1654 was produced in 1946 or 47. 
They're commonly called a "Scout",  but the Scout locomotive was not introduced until 1948.

Your 5121 & 22 switches are O27 switches, here's the manual for them:

http://www.lionel.com/media/servicedocuments/70-5121-250.pdf
These are supposed to be "non-derailing" switches.

I'm going out on a limb and guessing that the problem is
that your switches may not be opening or closing completely.
Are you certain they're getting the correct 8 - 14 Volts AC?

Does your 1654 derail in both directions(CW/CCW)?

Does it derail at the Points or another area of the switch?

Have you checked the gauge of your wheels, both pilot & drive wheels?
Are any of the drive wheels bent?

Dave

36 Steamer,
sorry for not getting an answer to you sooner, I've been off wandering around on vacation for the past couple of weeks without my computer.

Using a caliper, measure the inside to inside distance of the outer rails on 3 rail track, then measure your wheels on your train at the flanges, the flanges should be fractionally closer together than the distance between the inside of the the outer rails. If the distance between the wheel flanges is too narrow or too wide it will cause your train to derail.
I believe that you can purchase a wheelset/track gauge to check with if you don't have a caliper.

Dave