What is the best DCC decoder to use with this locomotive?
Just about any 8-pin decoder will work if you aren't planning to add sound. Digitrax recommends their DH165IP with integrated plug. If you want sound the Soundtraxx decoder selector recommends the TSU-PNP8 replacement PC board with the 810154 Mini Cube Oval Speaker/Baffle.
Len
I've had good luck using Digitrax Z scale or N scale decoders. If you have the 8 pin socket, get the ones with the 8 pin plug. If not, you'll need to hardwire the decoder and the plug will be unnecessary. These tiny decoders are robust enough to handle the current an HO locomotive draws, yet tiny enough to fit almost anywhere. You'd be looking at DZ or DN series decoders.
I have S2 and S4. I use Digitrax DH165IP in both just fine. Remember to ensure #1Pin goes into #1Socket. I have two VO-1000s and DH165IP decoder was too tall for shell to properly seat. I'm getting DN136PS to sit lower on the 8pin socket. Going from DH (HO scale) to DN (N scale) often works just fine.