Prevent Object Flipping AE

Is it necessary for the train layer to be 3D?

You are experiencing Gimbal Lock because the motion path is in the X, Y plane. You can eliminate this problem if you add a 3D null to the scene, parent all the 3D layers to the null including the camera to the null, rotate the null -90º in X, then release the parenting. The camera is now pointing straight down, the motion is confined to the X, Z plane, and the gimbal lock that is causing your layer to flip over when you orient along the path is gone. You just have to rotate the Train layer -90º in X and if needed 90º in Z. That's all there is to it.

You could also copy the motion path to a null layer, set up a position, and a look at expression to point the train layer at the null, but that's a lot more work. 

Perfectly normal. That's that old Euler vs. Quarternion thing. It's called "auto-orient(ation)" after all and behaves the same as the respective property on 3D layers therefore. There are several expression-based solutions for this in volving defining a custom "up-vector" and there are canned script solutions on AEScripts.com as well. Check this stuff out in a quick visit or web search and pick your favorite

Mylenium