A: Yes, the brass wheels probably need cleaning badly, as does your track. Use a Scotch Brite Pad and some solvent, such as mineral spirits, on them. Make them shine.
The reason the locomotive wheels don’t spark is because they don’t function as power pickups on a no. 300AC. Both sides of the electrical circuit are picked up by the brass tender truck wheels, which are on the opposite sides of the car. If cleaning the track and wheels doesn’t solve the excessive arcing problem, chances are your motor needs a good cleaning and tune-up too.
the no. 300AC is not equipped with a whistle or smoke unit and choo-choo for that matter. The wires coming from the tender are the power leads to the locomotive motor.