So what caused this to happen http://www.youtube.com/watch?v=GEkZPZpeaQM it looks like the last car split the switch and ran into the stopped train, but it is hard to see what kind of damage was done and I am wondering if anyone was hurt, and how the car was able to split the switch.

This happened in 2007 - see this URL for the thread:
http://rypn.sunserver.com/forum/viewtopic.php?f=1&t=23332

Damage was fairly minor:
http://www.thecherokeean.com/news/2007-07-11/Front_Page/Derailment_washout_halt_TSR_train_runs.html

I think that the cause was a crew member throwing the switch before the train on the main line had completely cleared it, but can't find the final report.

Indeed, the switch was thrown under the last car of the train. Fortunately, it was unoccupied.

Damages were estimated at:
Car - $7,000
Track - $1,000
#300 - $3,325

The FRA report is publicly available by going to this site and entering the appropriate search parameters.

http://safetydata.fra.dot.gov/officeofsafety/publicsite/Query/incabbr.aspx?r=1

Those numbers are not counting the damage done, in the minds of people who watched this on the news, and in the papers, and decided, not to visit, that "ran down train wrecking railroad"...

Unfairly or not...

June and July were not good months for the Texas State Railroad that year. A windstorm blew down the station set of "The Great Debaters", then the collision at Mewshaw,then the next week, the washout. All this and American Heritage was taking over September 1st. It was a tough summer of 2007.