You may have heard to never use steel wool to clean electric train track, especially Lionel, but you may have never heard the reason why.
There is a good reason.
Postwar Lionel trains had a feature called Magnetraction, which used magnets in the wheels to make them stick to the track better. The problem, if you clean track with steel wool, is that the Magnetraction picks up the microscopic bits of steel wool, then pulls them up into the gears and into the motor, where it does serious damage. In some cases, the entire motor mechanism has to be replaced.
The problem is a bit less acute with American Flyer trains made by A.C. Gilbert, Marx trains, and other vintage makes such as Ives, since the wheels aren’t magnetized, but there’s still a chance that large spinning electromagnet flying around the track will attract what’s left from the steel wool and pull it up into the works.
If you need to clean old train track and need something abrasive, the safest thing to use are the green scouring pads, such as those marketed by 3M under the Scotchbrite brand. Since they aren’t magnetic, whatever bits remain on the track will stay on the track and not get pulled up into the motor.
Sandpaper will work, but it has other issues. Sandpaper is more likely to leave grooves in the track that are large enough to trap debris, which quickly becomes a compounding problem because the arcing caused by the debris causes the track to attract still more debris. Cleaning with the pads causes fewer problems.
But generally speaking, you can often clean track thoroughly and effectively using non-abrasive methods, such as wiping the track off with mineral spirits (available in the paint aisle of your hardware store). Wear gloves when using it for an extended period of time. Using solvent is less likely to wear off the tin plating that’s on many kinds of electric train track, which leads to more rust. And if there’s rust on the track, a soak in rust remover will make short work of it without abrasives.