There were two 2026 locos in the stuff I bought yesterday. One was another of the korean war issues like the one I linked to earlier.
This second one seems to be what you are describing:
This one runs well, and the reverse works. The smoke doesn't work, but the beloows is blowing air through the chamber. (I put a pinch of smoke pill crumbs into the stack and they were blown out.)
The smoke unit either has a bad element or has a bad wire to the element.
This is the normal state for used trains I buy from the public. I can see that someone was inside this loco because the wires to the brushes are pinched between the body and the motor with a peice of cardboard stuck in to prevent shorts.