On engine failure during take off, if the flight director needles are swinging all over the instrument and distracting you then switch off the FD so you can obtain a clearer view of the ADI. Once you have settled into a stable climb-out, then re-introduce the FD. Remember that the FD is just an aid to flying the aircraft - not the be-all and end-all to flying on instruments.
In addition it may often be helpful for the student if the instructor slips into the seat and actually demonstrates the procedure (if he is game, of course).. A picture is often worth a thousand words. This is standard procedure in elementary flying training and the principle holds good in simulators. It is also good for a few laughs....