Train wheel flats are formed when wheels slip on rails. Crucial for passenger comfort and the safe operation of train systems, early detection and quantification of wheel-flat severity without interrupting railway operations is a desirable and challenging goal. Our method involves identifying the wheel-flat size by using a model updating strategy based on dynamic measurements. Although measurement and modelling uncertainties influence the identification results, they are rarely taken into account in most wheel-flat detection methods. Another challenge is the interpretation of time series data from multiple sensors. In this article, the size of the wheel flat is identified using a model-falsification approach that explicitly includes uncertainties in both measurement and modelling. A two-step important point selection method is proposed to interpret high-dimensional time series in the context of inverse identification. Perceptually important points, which are consistent with the human visual identification process, are extracted and further selected using joint entropy as an information gain metric. The proposed model-based methodology is applied to a field train track test in Singapore. The results show that the wheel-flat size identified using the proposed methodology is within the range of true observations. In addition, it is also shown that the inclusion of measurement and modelling uncertainties is essential to accurately evaluate the wheel-flat size because identification without uncertainties may lead to an underestimation of the wheel-flat size.