In a world with no oil we'd have run out of coal by now & be burning bulky materials
Nah, we had 300 years of coal left before Thatcher destroyed the mining industry. All of a sudden the figure magically dropped by an order of magnitude overnight, despite there being no change in the amount of coal that was still down there. Yeah, right.
Developments in locomotive technology: we would have had to get rid of the direct involvement of humans in the firing process. The need to have someone stood there with a shovel to move the coal from the fuel stash to the firebox (while looking into the firebox to see how much and where it was needed), and the need to lay the locomotive out so as to make that possible, had been a drag pretty much from the start of locomotive haulage; the attempts to find a way round that so far had been inept and clunky and more trouble than they were worth in most cases, so the situation remained.
Some of the disadvantages are of course obvious, but among the less obvious ones are all the compromises consequent on having a big hole in the firebox to chuck coal in through. You can't have the firebox above atmospheric pressure, so you have to create the draught by sucking from the other end, which more or less compelled you to do it by using the exhaust steam to power an ejector because a great big fan running in filthy abrasive hot gases never worked very well for very long. This in turn compromised the efficiency: it interfered with the free passage of the exhaust steam, it made condensing the exhaust steam far more trouble than it was worth unless you were running in a desert, it also constrained the path length over which the combustion gases gave up their heat so they went up the chimney with a considerable amount of energy still in them and again made efforts to overcome this tend to end up being more trouble than they were worth. Also, you inevitably had a pretty large minimum amount of air being supplied above the firebed rather than below, which in turn compromised your control over the combustion process. And the combustion has to take place in a large mass reacting slowly, and both reacting and being fed from the top down, which makes it slow to respond to changes in load, as well as tending to less ideal combustion.
So I'd be thinking of carrying the coal as dust rather than lumps, making automatic handling much more straightforward, and injecting it into the firebox (which wouldn't look much like a "normal" firebox) by steam jets, with air supplied by fans operating in clean cold air and the draught powered by the positive pressure blowing from the firebox end. Combustion takes place through a Porta-style gasification process using the steam as an intermediate in the reaction, in a comparatively small amount of reacting mass. Centrifugal vortex separators remove solid particles from the hot gases before they leave the firebox, to prevent loss of uncombusted material and fouling and abrasion of the tubes. The boiler is at least partially a water-tube type, to reduce mass and conduce towards higher pressures. After the gases have passed through the boiler, the remaining heat is used for preheating both the feed water and the combustion air, and the final exhaust temperature is little above ambient. Condensing the exhaust steam both recovers more heat and increases the efficiency of the actual engine bits.
You still have the fireman, of course, to regulate all these processes, but he doesn't have to shovel coal and he doesn't have to stand in between the boiler and the coal all the time. He's watching gauges and adjusting valves and stuff, and he does it sitting down in the cab like the second man on a diesel, only rarely needing to get up and mix it with the dirty bits to clout something or other.
You have considerably more freedom in how you arrange the various parts, and you are no longer necessarily dominated by a huge and heavy boiler as the principal and overwhelmingly biggest component which more or less dictates where most of the other parts go. The result looks much like a diesel, but doesn't end up being down on one side to let you get past the boiler or whatever. The actual engine parts are probably high-speed units driving bogie axles through gearing, which reduces weight, means you don't have to worry about "hammer blow", allows you to have no carrying axles, and lets you use a thoroughly-designed and properly effective suspension system so all the novel gadgetry doesn't get shaken to bits like it usually did.
The centrifugal separation of the flue gases makes it a much cleaner device to use, as all the muck either burns or remains in the ash pan, and doesn't accumulate in the smokebox or come blurging out of the chimney all over everything. You have a single point of crud removal to deal with on shed instead of having it all over the place. Similarly the fuel storage and handling is done by enclosed parts so it doesn't spray coal dust everywhere like a conventional open system does. Condensing the steam re-uses most of the water and makes it practical for the water for what topping-up does need to be done to be properly treated and purified, so the boiler needs less maintenance, doesn't get insulated by scale, and can rely on a water supply containing surfactants to improve heat transfer. The lower thermal masses in the steam production system enable it to start up in a time limited by thermal stresses rather than plain massive thermal inertia, and the much-simplified decruddification processes mean it can keep going for much longer with only refuelling and emptying the ash pan before you need to shut it down and let it cool off to do more complicated things to it.
Multiple unit working is much the same as with diesels, since all you need to do is transmit indications and control signals between units by whatever method is most convenient. You do need to provide multiple duplicate control panels at the fireman's position, so the number of units is limited by the number of panels, but that's not serious since we very rarely want to hook up even three in multiple anyway. (Insert aside about the panel of engine and air indicators to the left of the driver in old DMUs.) Similarly you can implement advanced signalling systems by hooking them into the same bus.
Why? I'm not sure, but it's still fun to think about. Maybe Westinghouse snaffled up all the patents on diesel engines or something.