Mystery Solved!

I agree that the locomotive in James' photo is the one that is now at Loon Mountain. Great catch, Bruce.

However, that is not the Loon Mountain track plan. The railroad at Loon Mountain is basically a straight shot between two ski lifts running alongside the parking lot. You can see one end of the RR from the other.

B. Barry recalled an operation in New Hampshire during that time frame; it was "Steam Village" in Gilford, NH. (This is not the defunct "Beaver Brook Transportation Museum" in Mount Vernon, New Hampshire.) Putting the two together, we find:
[www.loonmtn.com]
Which confirms:
The [Loon Mountain] Railroad may harken back to the area's logging past, but the train has its own, unique history. The engine, a German-made Ornstein & Koppel, spent its early years in service at a concrete plant in Münster, Germany prior to World War II. Following the war, the locomotive was acquired by Steam Village, a short-lived tourist attraction in Gilford, New Hampshire. When Steam Village went out of business in the early 1970s, Loon purchased the engine and built the J.E. Henry Railroad. The original engine and cars, which were built at Loon, operate to this day.

I think some of Steam Village's equipment also ended up at Boothbay Railway Village.

Photos (and any recollection) of "Steam Village" seems sparse to say the least; it is certainly not a well-known operation. That's apparently a pretty rare photo!

Ed Lecuyer
General Passenger Agent, WW&F Railway Museum
Help the WW&F Build Locomotive #11: [build11.wwfry.org]
Bring Trains to Maine up from Africa: [www.wwfry.org]