Sam_98 made a correct statement when describing the difference between darning foot and walking foot: the darning foot is used for FMQ and the walking foot is used for straight line or for very, very gentle wavy lines.
twinstitches - it sounds like you've been trying the correct things - it's not normal for the pressure foot to stay a quarter inch above the fabric when the pressure foot is down...it should drop down to about the top of the quilt "sandwich", but not push into it too far. Is it possible you have a high shank machine and purchased the foot for a low shank? if so, this would keep the foot too high. I'm not familiar with your model of machine, so you may have to check to see which one you have. Check out this link to find out how to tell.
http://www.clotilde.com/pages/which_foot.html
Regarding the stitch length - putting it on zero was correct - that gives you more control of the stitch when you FMQ.
Don't have any other ideas for now, but will keep thinking.