What am I seeing? (electrical problem)

[Sumpter250]

I did not have the power supply connected when testing the track.

or -- any rolling stock or loco ????

"I have vacuumed the ballast out from around the area where the problem seems to be occurring. I narrowed the problem area down to this location by raising the track onto wood blocks and then removing the blocks one at a time until I found the location where the short reappeared." ---So, all your ballast is loose, not glued down ? maybe you should remove it completely for a foot or two either side of where the apparent problem is, and see if the problem "stays away".
Have you ever used steel wool for anything on, or near the track ?, or anywhere else?, since the last time things were working properly. My thought here is, something like a steel wool fiber, carried to the rails by a shirt sleeve, or by a piece of rolling stock that might have been set on "the source", "making contact with" brass rail could cause the resistance readings you saw. There is also the thought that the short might be "chemical" in nature....something spilled, dried up, but still conductive.

"A digital meter shows a short with about -500 ohms with the common lead on one rail. If I switch leads the meter shows open. With an analog meter I show about 500 ohms regardless of which lead is on which rail." --- That, is a bit odd, but the 500 ohm reading seems to indicate "contact resistance" between the rails, and the "cause" of the short.

In any case I can't do too much more than to "go on shooting in the dark", so I wish you luck "finding the gremlin".