Turk -
Perhaps the nastiest installation I've done, I fear. Getting the body shell off is a royal pain. It's a very, very tight fit, the engineer/fireman figures in the cab will almost certainly get pulled off during both disassembly and reassembly. Your best bet there is just to make sure they're inside the cab when you reassemble and then re-glue them using tweezers or similar after you're all reassembled (yes, it's as much a P.I.T.A. as it sounds).
Also make sure you remove the click-on steps at front and rear otherwise they'll come flying off. Technically removal is very simple, just a couple screws, lift front and rear "clips" in... but in practice it's just sort of a beast.
Once you're disassembled, the decoder fits pretty easily inside the "firebox" housing of the cab. Reassembly is perhaps slightly easier, but not much.
Sorry I didn't take photos to show you the steps -- but can tell you you're not doing anything "wrong", it really is a quirky little install!
PS - The schematic/directions from Bachmann are quite helpful in figuring it out. If you've not get them, see if you can get them from the bachmann site or their message board. I can scan them for you, but it's gonna be a few days before I could get to it... Holiday season is my "looney" time at the office, I fear...