Even with the zig zag cam in place you still have to choose a width for the stitch. On my 503 (very similar controls) there is a setting for STR (straight) and then 1-5 for width. If that lever isn't working there may be some dried oil or something gumming up the inside or needle bar area. If you want to do anything other than straight stitching you will have to get some of the black "top hat" cams that Singer made. Good luck.
Pat