Yeah, yet again another annoying glitch I encountered. eventually had lose 2 hours of play to go back far enough so that this quest actually went off OK. .
The guy basically says "Your trail ends here" and then that's it screwed.
His behaviour depends on your actions. If you talk to him about your suspicions and plans to watch the tower, he'll attack you and you can't save the train. If you don't warn him ahead of time then he talks on the radio and you have a chance to sneak out and save the train.
No, it doesn't matter what your actions are, I didn't speak to him or get spotted, crouched at the bottom of the stairs, and he simply wouldn't initiate the quest dialog. I just had to keep reloading my game and then trying the same again and eventually it worked.