Welcome back to the hobby.

What you have described about the engine when the whistle is blown seems odd to me.  I have engines that are much newer than 25 years old and none of them do as you describe when the whistle button is activated.  There must be something about your engine or the ZW transformer that is causing this to happen.  Do you have another transformer?  Do you have other engines with horn or whistle?  What type of reversing unit does the engine have?  I am curious about why this is happening to your engine.  Is there an O gauge club in your area or a Lionel service store?