I see what you mean now...Thought it would be a Ringfield, but its not as its much older! So ignore the previous advice! Sorry!
I see the item you're referring to - X217 or X216. They should not be used for DCC.
Commence by removing all wires from the motor brushes and chassis.
There must not be any connection what-so-ever between the motors chassis to either of the two brushes - see text below re insulating the V spring. Check the brush gear return spring (S3121) is not allowing any connection to the brushes!
Now wire directly from the pick up wire end (where the suppressor was cut off) to the decoders red wire and then the black decoders wire connects to the chassis - normally its easier to fit it under the screw that holds the V spring in place! But you might be able to use the former lighting connection screw too?
There shouldn't be anything else in the circuit.
Then wire the Orange and Grey wires directly to the two motor brush connections. You will need to place a piece of insulation sleeving on both sides of the V spring under the brushes top (there should already be one on one side anyway!) The spring keeps the brushes under tension onto the comm. Ideally solder the orange and grey decoder wires directly to the tops of the brushes, or use one (or two if you have them) of the little shaped push in connectors with the decoder wires soldered to them and they are then pushed in along side the brushes top part and held by the now fully insulated V spring.
If the loco runs the opposite way from the direction set on the console, reverse the Orange and Grey motor wires.
Having previously removed all lighting wires from the motor connections and chassis. You can now use the decoders White wire together with the common Blue wire for the directional lighting (Blue is common positive). 'F0' will turn on/off the light. The light will be automatically extinguished when running in reverse. If there is another light at the rear use the Yellow decoder wire with the common Blue to feed that.
The other alternative is to use the green decoder wire (on a 3 or 4 function decoder) and the blue wire. Then 'F1' will operate the light but its wont automatically turn off on direction change.
Insulate all in-line soldered joints ideally with some heat shrink tubing placed onto the wire before twisting together and soldering the joint. Then once the soldered joint has cooled, slide the tubing over the soldered joint so as it covers the joint and some of the wire insulation at both ends of the joint and then shrink it down with the aid of the soldering irons hot tip.
Service sheet link....http://www.modeltrains.net.au/hornby/service_sheet_details.asp?sheetid=166
Best wishes with your railway modelling.
Broken? It was working when I left it!