I assume you are talking about the small lights on the nose by the number boards? These are ‘classification’ lights. They indicates the ‘class’ of the train:
Dark - Scheduled train
Green - Following section of a train
White - Extra train
Red - used as a ‘marker’ light when engine is running light or as a pusher.
For example - Let’s say that a scheduled train is going to be run in 3 sections. The first section would have green classification lights. The second section also will have green classification lights. The last section would not have the classification lights turned on - indicating that there is no following section of that train.
Classification lights are not used too much anymore and are not standard equipment on new locomotives.
Not sure about the light over the wheels. I think you may be describing the small light just above the front truck on the engineers side of a diesel This was used so that the engineer could see the ties moving in the dark. When pulling real slow with lots of power, the engineer needs to verify that the wheels are not slipping and the train is really moving forward!
The PA that we have is a Key Import O scale brass loco. It actually has an upper and a lower (4 in all) set of classification lights on its nose. From my research Ive found that only the NYC and only their later Pa’s had the four lights. I can’t find any pictures or details about why just the NYC had four.
The other lights I mentioned are positioned one above each of the four trucks. Your explanation though sounds plausible. I thought they might have been for wheel and brake inspection at night.
This afternoon, I googled “New York Central PA-2 - photos” and got a nice photo which showed the location of four class lights. The upper ones were functional, while the lower ones appeared to be blanked-out. I didn’t reply at that time because I couldn’t add any explanation, and had to go out. Unfortunately, the same search tonight came up empty. [banghead]
As for the truck lights, the switchers at the steel plant where I worked used them, too, although they were red, as shown. I suspect they did double-duty as a safety/visibility measure and to show the engineer if the loco was moving or simply spinning its wheels - these little locos pulled some respectable tonnage over some pretty severe track conditions, and all with only locomotive brakes available to stop it.