I’m surprised the 2000 grit paper is not working. I regularly use a rougher grade 1000/1200 grit wet and dry paper, used wet, to remove tampo printed decoration and similar. It can be hard work though using the very fine abrasives available, like 2000 grit - just persevere. Do/did LGB apply a lacquer coat over the decoration applied to seal/protect it ? That might be an issue. Or, if 2nd hand, has a previous owner applied a lacquer coat to the loco over the decoration ?
As it is, whatever method you use to remove existing decoration you are going to have to apply a gloss coat to the surface you are going to apply the decals to, unless the method you have used to remove the print has left a glossy polished base, like using auto paint cutting compound might (We call it T-Cut here in the UK - essentially a very fine abrasive). You will then need to finish with a coat of laquer, over the decal, that will match the rest of the loco’s finish. Make sure any lacquers or paints you use in conjunction with the decals are compatible with them, I’m sure Stan will be able to advise you.
Just applying a paint coat over the decoration as is will result in a raised “shadow” of the printed image showing through any overlaid paint finish and the decal. The paint might also react with with the print medium used with the decoration. Whatever you do persevere with removing the existing decoration, by whatever method, before applying anything over it or you might be disappointed with the results.
If you haven’t already got some get the Micoscale “Microset” product to aid in the application of the decal so that the decal’s carrier film is properly “hidden” when applied to the loco’s body.
