DC wiring is pretty straightforward -- you have a pickup wire coming from wheels on each rail and connected directly to the motor. In most cases each track wire will also go directly to the headlight bulbs.
So to convert to DCC you disconnect the pickup wires and hook those to the power or track inputs on the DCC decoder, then add new wires from the decoder motor outputs to the loco motor. The new wiring arrangement can provide a chance to greatly improve a loco's performance because a lot of the old locos (especially steamers) had very few wheels actually connected to pick up track power. On steamers I like to connect one pair of trucks to each rail, and where possible also try to connect drives on both sides. As an example, I have a Tyco 0-4-0 that would frequently stall on straight track, but after connecting both sets of drivers and tender trucks as power pickups, it now runs at a crawl even over my turnouts. If you have a chance to connect more wheels in your diesels, you should always take advantage of that.
The lights also present a new opportunity while you're working on your loco. You can convert to LEDs simply by adding an appropriate resistor in series. Warm white works greats for steamers, and cool white is good for anything else (including some newer steamers). You can find bulk packages of 3mm LEDs online for a few dollars, and they should provide specs about the LED including the forward voltage and amperage. Use those numbers in an online resistor calculator, and it will tell you exactly which resistor value to get (and if you can use a 1/8W or 1/4W resistor). Depending on your decoder, you will probably have hookups for both forward and reverse lights, maybe even some others.
Regarding the surging... I think you mentioned in another thread you got a digitrax that supports 1A current draw? Are you sure that's enough? It almost sounds like your loco motor is pulling more current than the decoder can provide.
