One thing was maybe that the seat the chose - which in the diagram was facing forward - was on the train facing backwards! And they did not want to ride backwards. So eventually that system was turned off.
So, in other words, maybe Amtrak does
not have the technology necessary to make this happen?
It's not a technology thing, it's a "have the time and ability to make sure that cars are in the consist pointing in the same direction" thing.
There's also the problem of intermediate stops that the airplanes don't have. Say an the Captiol Limited is sold out save for two seats. One person books one of the remaining seats WAS-PGH. Someone else books the other seat PGH-CHI. Anyone coming along after that looking to book WAS-CHI isn't going to be able to get a seat, since there isn't a single seat open for the entire length of the journey. That's a bit of an oversimplified example, that's easy to solve, but when you're looking at hundreds of seats on a train making dozens of stops, you can see that it'll quickly spiral out of control and allowing people to choose their own seat will reduce capacity.
You can do assigned seating and have the computer assign seats in a logical way that will help the problem greatly, but that won't give people the ability to say "I want seat 27 in the 2931 car".