That piece you called the hem guide is a seam guide, and you turn it over (from position shown) and secure it to the bed in one of the holes with one of the little screws with the "finger twist" top. (don't know the proper name - not a screw driver top). You can adjust it to give you a consistent width seam...a lot of quilters with vintage machines use them for the 1/4" seam, because it is nice and broad to move your fabric against.
I have a 66 treadle too, and just love that machine. Your story is so sweet...wish I had a family machine, but my mom didn't sew much after we got into school, and she didn't save any of her machines. Don't know what happened to my grandmother's treadle, as they llived in Missouri, and us in CA, so when they passed away, others in the family divided their household goods.