you must not have a common ground
I suspect my problem was somehow connected (!) with an unintentional "common ground"....
I had a substantial household AC volts -> 12v DC transformer. The power to the train motors came directly from the 12 v out from that. The 12v from that ALSO went to the 7805 circuit... with lots of capacitors... which was producing the regulated 5v running my PIC and one side of the opto-isoloators.
So... two transformers? One to "feed" the train motors, a second one feeding my Arduino? I'd hoped that the regulator would "filter" the power "downstream" of it? There was no "return" path "back" from the motors into 5v parts of the circuit?