Rusty's Ghost Engine was a narrow gauge tank engine referenced by Rusty, who supposedly worked on the Skarloey Railway.
According to the story told by Rusty, the engine was returning home one misty night when he lost control and fell into a ravine. No one was ever able to find him, but several workmen claim to have seen his ghost trying repeatedly to cross the ravine, only to disappear half way every time.
Rusty told Duncan his story after he teased Peter Sam for allowing his trucks to derail and fall into the ravine. Duncan disbelieved the story, but the next day Duncan's crew arranged things so that Duncan believed the engine was trying to cross the bridge at the same time as him, and quickly ran back. The crew used fireflies to help form the ghostly appearance of an engine, resembling Rheneas.