Yes, I've added it to the original post.  The decoder is hard wired and fits into the smokebox, making the shell easy to remove.  I intend to run the locomotive on DCC only, but the LED will be lit when travelling forwards on DC power.

Does your decoder for DCC use have a firebox flicker function output? Most do and that will help create the flicker. Also, try an orange LED instead of red. They look the business I reckon. DCC Concepts do a range of these LEDs I have used before and they are most satisfactory.

The decoder is a basic Hornby X9659 4 pin decoder, chosen because I could be sure of fitting it into the locomotive.  I think it's possible to get 'candle effect' LEDs that flicker on their own, I have no idea how they work, or if they'd be anything like a decoder effect.

I have used a candle effect LED in a station building fireplace - they can be acquired very cheaply from Poundland (other cheap available) in packs of three "flameless tealights" - they run off a 3V button cell from memory, and I blew one up while figuring out the appropriate resistor, but at £1 for 3, that wasn't the end of the world! That being said, a loco firebox tends to be a nice, big, hot fire (hopefully!) so the flickering effect is reduced, if it is there at all. Depending on how hard the loco is being worked, I would suggest that a fairly constant light from yellowy-white (not working hard) to bright "warm white" if barking up a steep hill would probably suit best.