You have selected the correct stitch. Did you try selecting the medium woven in the advisor? That will put a bit more tension on the top thread. Are the loops everywhere or just on curves? If they are everywhere, then tighten your top tension using the adjust screen. If they are just on the curves, you need to slow down your hand movement on the curves. I used my Designer I to do a lot of FMQ, but I invested in the spring foot. Might want to look into that. There is an additional setting for this foot.