I don't understand what I am doing wrong
 

I have tried this several times. I program my machine to embroidery a message and it messes up
this message should read. For Taylor love mom 1/24/2013. But I messed up. I am lost

I will try that next time.

Also use the same color thread in the bobbin as the top.
Another thought is have you reduced the size too small.

My machine does one size. Great tip. I am learning. I just got done taking out that mess. Not fun.

I always found on something soft I needed a stabilizer. Try adding a medium weight tear away stabilizer on the top (you could also add one on the bottom as well). This should help with any tension issues. I would also try a sample sandwich and see what works best. Good luck!!

I use the quilt sandwich method for a practice run. If I'm not really sure about the fabric for my project, I make a small sandwich out of that particular fabic. If I'm doing a label, I use a lite-weght fusible to stabilize the stitching.

I did a quilt motif on one quilt and found I had problems with the stitching when the weight of the quilt pulled the area away from the stitching area. That is what this looks like to me. Good luck!

Coffee filters work great as stabilizers.

I don't know what machine you are using, but try playing with the tension a bit, and then play with the stitch length a bit, as it may close up the letters that are open, like the "o".