Thanks for that pic. You should be aware, though, that the signal in that pic is missing the restricting aspect on the lower head. Then again, it doesn't seem Trainz provides a proper means of producing a restricting signal so it probably doesn't matter.
Ok, here is a demo with pics as to how my layout is behaving:
Ok, here, above, we have both switches lined for the mainline. Clear signals on the distant signal as well as the home signal. Everything is working properly.
Here we have the near switch lined for the siding, but the switch on the end of the siding is still lined for straight. We're getting all proper indications here: A Medium Approach on the home signal, and an Approach Medium on the distant signal warning of the speed restriction on the home signal.
Here things are starting to look questionable. The near switch is lined for the mainline, but the far switch is lined for the siding. We have an Approach indication on the home signal and an Advance Approach on the distant. This WOULD be accurate if this were a three-block system. However, Trainz only uses two-block signaling (AFAIK).
Now this the one that is really off. Both switches are lined for the siding. The Medium Clear on the home signal is correct. But a clear signal on the distant definitely is not. Diverging signals, even if clear, require a speed restriction no different than Approach, Medium Approach, etc.
I have poked around the config files and it seems to be the problem is the relatively paltry signal states (there's just 9) that may prevent a proper approach aspect from being displayed. However, you're the brain and I'm sure you know a lot I don't.
ETA: I tried replacing the PRR signals with B&O CPLs and no luck there either.