Since you've troubleshot everything else, have you looked at how fast you're running the machine? I found with Sulky I need to slow down considerably or it shreds and breaks on me regardless the size of the needle. I suspect it has something to do with the friction/heat buildup when the needle is going up/down at a high rate.
The only other thing that comes to mind is a burr on the needle plate. Have you broken a needle lately? (ask me how I know this one lol)