Are you using a smoothed path or do you want to create corners and bevels ?
In a smoothed path using large segments, there is not possible to avoid overlapping because it's a problem inherent to the geometry. For bevels (as shown in the image), use Corner vertices and enable 'Bevel' mode in the Geometry rolllout.
The crashing issues are probably caused by the size of the mesh. How many faces has the RailClone object ?, Are you using Max 9 32 or 64 bit ?
In RailClone 1.1 beta we have added support for VRay, allowing to render objects of virtually any size. But by now, these features are available only to Pro users.