Digital command problems with AC/DC Common Ground
simulate this circuit &ndash; Schematic created using CircuitLab

Figure 1. Three-rail track with track-occupied indicator.


  a) Any problem with having AC and DC ground connected? The trains receive digital operating commands through the AC power connection. 


This looks OK for normal operation. 

You need to watch out for abnormal faults, however, such as a short from the centre to your indication rail. This will expose the LED alternately to DC voltage minus AC positive peak to DC voltage plus AC negative peak. If R1 is chosen to limit the current through the LED to, say, 10 mA in normal operation then it should be fine. (\$ R_1 = \frac {V_{BAT}-V_{LED}}{I} \$ where \$V_{LED} \$ is typically around 2 V.)


  b) Will the DC Ground have any detrimental affects on the train control?


Again this should be fine.

Note that if you want to interface with a computer or micro you can add an opto-isolator LED in series with D1 and use the opto-transistor to switch your micro.









simulate this circuit

Figure 2. A slightly more "real" track-circuit.

Real railway track circuits work on the principle of proving track not occupied. Any other condition (power-supply failure, broken rail, other short circuit, flooding) causes loss of track clear and switches signals to a more restrictive state. The circuit of Figure 2 shows a means of achieving this.


R1 limits the current from the battery when the outer rails are shorted. 
R2 limits the current to the LED if the centre-rail shorts to the upper rail. - R1 and R2 should be set to half the value calculated for the Figure 1 arrangement. The upper rail will be at \$ \frac12 V_{BAT}\$.




A word of caution: it would be worth testing the robustness of the system by wiring up one LED in your chosen configuration and shorting the centre-rail to the detection rail to ensure that a sample LED will survive. You haven't given voltages so we can't be sure at this stage. Report back if the LED blows and quote the AC and DC voltages and link to the datasheet for the LEDs.