The second victim's name was being withheld late Sunday because her next of kin had not been notified of the accident, police said.
The train - traveling about 40 mph at the time of the collision - pushed the mangled car almost a half mile before it came to a stop in a wooded area, police said.
Frank James, of the 2000 block of River Road, said he was sitting on his front porch when he heard the accident.
"It was a real loud bang. I thought the train derailed at first," said James, who said the train was still moving as he walked over to the nearby crossing minutes later.
The car, crushed in from its right side and rear, landed facing the train along the side of the raised track, its rear right wheel hooked over the exterior rail.
Parked several yards down the track, the train appeared undamaged by the accident.
Hundreds of small chunks of automobile glass filled the crevices on the front of the gray, blue and yellow engine.
Both women died as a result of the collision, said police, who weren't releasing any details of the rescue effort Sunday night.
The train crew was not injured, police said.
The cause of the accident is unclear, said Senior Trooper S.E. Davis, who said the Morgan County Sheriff's Department and state police are still investigating.
While there are no warning signals at the crossing, oncoming trains can be seen at a distance.
Train traffic from both directions was halted for about two hours while rescue personnel from Berkeley Springs, Hedgesville and Hancock, Md., worked.
For safety reasons, it's common procedure to stop all train traffic through an area following a significant accident, said a spokesman for CSX Transportation in Jacksonville, Fla.
The 76-car train was headed to Baltimore from Cumberland, Md., carrying a full load of West Virginia coal, he said.
The stretch of track along the Potomac River in Morgan County, W.Va., is part of CSX's main line between the East Coast and Chicago, he said.