Sets 118 and 138 (and 139 and 139A) contained an electronic whistle receiver unit.

The unit takes a high frequency from the microphone, filters it and uses the signal
to switch a transistor that charges and discharges some capacitors.

The capacitors change the state of a flip-flop, which turns the motor on in one of
the two flip-flop states.

The unit in 138 and 139A also reverses the motor with a longer high-frequency input
from the whistle.  It has an H-bridge motor drive and uses a 14-pin IC.

In the late 1960s this was cutting edge technology for toys!

Thanks to Ben for the 118 vs 138 comparison pictures.
http://www.brickshelf.com/cgi-bin/gallery.cgi?f=267093

I reverse engineered the 118 unit circuit.
Reading previous posts on this topic, there has been some confusion over whether
the transistors are Germanium PNP types (AC113 (x5) and AC114) or not.
The alternative is silicon NPN types BC113 (x5) and BC114.

Whilst it makes sense to use emitter followers with the restricted 4.5V voltage range,
I think NPN transistors are more likely, given the circuit topology and the "a" on the
transistor cases, which indicates layout "a" of the pins for a TO-18 case, putting the
emitter next to the tag on the case.

NPN transistors also mean that the circuit could be replicated with modern transistors,
such as BC108 (x5) and BC109, according to transistor equivalence data.
However, care must be taken as to the DC gain because old transistors had poor DC
gain and modern ones have much more.  This would lead to oscillation at low frequencies,
which might require extra filtering to sort out.  Something to find in prototype testing!

If I get hold of a 138 unit I'll reverse-engineer that one too!
If anyone has a 138 unit and could tell me the number on the 14-pin IC, that would be
useful, even if keeping the unit pristine (and not opening it) is a priority for you.  A torch
often helps when rverse-engineering these circuits!
I suspect the chip is either TTL gates, flip-flops, a transistor array or an amplifier.

Note, the image in the instructions is a prototype 118 unit, so it looks different but works the same.

Mark Bellis