Electronic – LM317 power regulator ajust is affected by MAX485 chip

The LM317 is a linear regulator, which is really inappropriate for significant power, like what a model train requires. You say the train draws 300 mA. That means at 3.3 V drop accross the regulator it would dissipate 1 W, which would require a heatsink.

I'm not sure why your regulator is dying. I thought (haven't checked) that the LM317 has integrated thermal shutdown, so it should shut itself off if overheated. Perhaps it doesn't. Check the datasheet.

In any case, a switching power supply is the right answer. I am actually working on a product right now for the model train market that includes a track power supply. I am starting with 48 V. That gets bucked down to whatever the user selects as the track power supply voltage, then a separate H bridge circuit implements the polarity flipping for the DCC protocol. I can dump a few Amps onto the track and the board gets warm, but not hot. Once this becomes a product, the schematic will be made public. If you really want to see what I have so far, I can make it public unofficially, but I don't like showing internal designs until everything has been worked out and properly tested.

On a separate note, why not use DCC? That completely gets around the problem of "sending one of the trains in reverse due to the common rail".

If you had a short in place of the potentiometer, you should have read 1.25 volts (or so) at the output of the LM317, not 12.5 volts.

When you changed your meter to read current, presumably moving the red lead to the "10 Amp" socket, the meter would have very low resistance. When you then connected the meter between the LM317 output and ground, a very large current would flow, apparently causing the LM317 to explode.

If I recall correctly, the LM317 is spec'd to deliver 1 amp, with due regard to voltage drop, power dissipation, heatsinks and phase of the moon - that only states the current that it can safely carry under suitable conditions - it DOES NOT limit the current to that value!

The current measurement function of a multimeter should only be used with the meter connected in series with a load whose current drain you wish to measure. It must NEVER be connected directly across a power supply.