DN121 (or is it a DZ121?) is really ancient, but it is a (really basic) DCC decoder. There was a known problem with certain run of those, but not what you are experiencing.
Was this decoder previously installed and working in a model locomotive, or you just found is loose and tried to use it?
I'm not familiar with that decoder tester. You mention that functions check out ok. Does the tester have a motor which is used for a load during test? Does that motor run? if not, and the problem is with the motor circuit, then that tester is not very thorough. You can have decoder where motor circuit is blown, but other functions will still work.