So many replies.

Fantastic stuff...thank you all!
I do not hve 04 but it looks to me like you need to remove the lower signal as well as the two inv. ones up top. Then set the switch default to the left. When the end of the train passes the switch it will turn left and the train waiting should get a green signal to start. Carl
I did exactly this and it worked perfectly! Thank you! I am not 100% sure I understand why but it does. I even put the switch to the right and it worked perfectly in my tests (which is what I want). I am assuming that the diverge signal defaults to a caution which might explain part of it but more below...
I would have a look at placing a trigger in an appropriate place and using the activation of this to fire up a rule to free up the junction and / or signal (as required).
That said I have never used 04 so I don't know what rules etc are available - this may not be possible for you.
Have a look at the signalling tutorials here:
http://trains.0catch.com/tutorial.html
They may help.
'04 is a very quickly dying dinosaur and I'm sure I will get '10 eventually but I'm building a route in this and plan on finishing it there hopefully. The fascinating rule you mentioned is for '06 and above though.
I used Chuck's fantastic tutorials quite often recently (very well written and I'm doing the signaling part of my route right now) but in reading the signalling guide, it says to put a signal before the diverge which is what seems to have caused all this ruckus in the first place. @@ More about that below.
Not sure how prototypical it is, but what I do is put a signal on each approach to a junction. (In otherwords a train approaching the junction will reach a signal before the junction and the signal will be facing the approaching train.) Not sure what the purpose of those invisible signals are, but they seem to be facing the wrong way. (I'm also not sure what those objects next to them are.)
Normal junctions will thus have 3 different signals, all facing the trains that are approaching the junction. (Junctions where a section of track is one way, say a turnaround loop, will only need 2 signals since the train will only approach the junction from two directions.)
Prototypically, I agree with you: it makes sense to me that there would be a diverge signal before the switch. I put the invisible signals after because I wanted the waiting train to know that the switch block was now clear (after the caboose passed the invisible switch). I'm not sure how it knows, but following lewisner's and j_maybury's great advice, once it is close to passing the searchlight signal on either track, it frees up the switch and all is well.
The signals next to them are searchlight signals. I put invisible signals in the other direction so that the track would be 'double signaled' so to speak. I now think this is unnecessary though.
Have you tried using Track Direction Markers to make each side of the loop unidirectional i.e. (in the states) trains approaching from the camera only use the right hand line and trains from the far end only use the left hand line?
I thought about that but taking the pass track requires a slower speed. This route (and the real life area I am modelling of it) has very challenging grades and long heavy consists so I'd rather always have the through train avoid taking a pass track whenever realistically possible. It would not be prototypical either although I know we have limitations c/o the signalling system in trainz.
The signal on the approach from train A is the problem. If the left hand track always holds train B then the signal needs to be removed. On single line running with loops dont place any signals on the single section of track. Keep all signals in the loop section, preferably at the ends of loop sections. Placing a signal where you have it another train approaching may have control and not let B out.
I remember a wise trainzer (Euphod)'s advice in that we should not put signals where we would not want trains to stop. Logically that makes a lot of sense here.
I would go with Lewis; the switch setting is critical, once you have set your switch to the left and saved the route, the switch to the left become's the default setting, and will then revert to the left as soon as the train passes, leaving your (B) train free to continue.
Once I removed the invisible switches and diverging signal, all worked well. I put one loco on the pass track on the upper left and asked the bottom to go along the same path: it went a bit past the switch but refused to go forwards (and normally I'd never ask it to go there). I tested in it several ways and it did not matter which direction I placed the switch in but the invisible signals and diverging signal had to go.
What I can't figure out though, is why Chuck's guide
http://trains.0catch.com/tutorial.html and even the signaling guide manual says to put a diverging signal before the switch. @@ Forgive me for being dense, but could someone explain to me why those guides say to put it and why it works properly (and the way I want) without it?
I just realized another problem. I will show you all with another (very crude) picture:
green = signals (facing towards the center)
black = track
red = switch and switch direction (by arrow)
My route goes like this. How can I avoid a cornfield meet then? By setting one switch to the pass track and the other through the straight track? I assume that if one train entered the block then the other path would open up but would placing the switches in different directions help prevent the potential cornfield meet?
:wave:
Gisa ^^