Instructions
Read up on collecting model trains. Books like "Basic Model Railroading: Getting Started in the Hobby" could be a valuable resource.
Go to Walthers. It has an 850,000 item catalog. The catalog contains "old-fashioned" trains, modern trains, hard-to-find Cornerstone Series kits, you name it. There is even a section on the site called the "Train Set Chooser" to help you find the set that's perfect for you and your child.
Check out Lionel. The mission statement alone would make any model train enthusiast weep. Go to the "Shop Online" section and weep even harder. There is an extensive section on buying the right set for you and your child, and another marked "Is your child ready".
Explore the Internet Trains site. It has trains, scenery, smoke, building supplies, videos, books, micro-scale sets and HO scale sets. It will keep you occupied for hours.
Venture to CMT, the Canadian Model Trains. It has Walther catalog, private auctions, brass trains and plastic trains.
Head to online auction sites. Sites like eBay are a great place to find model trains. Just be careful you don't become too enamored with a train you see there and pay far much for it than it is worth.
Try the Golden Spike's website if you want something antique. Check out their model trains, remote switches, water towers, and everything conceivable from the forties and fifties. The company also restores antique model trains, so it might be worth visiting the showroom in New York City one day.