The 400 and 500 series Singers do not FMQ well. They are wonderful piecing machines and general quilting and sewing, but FMQing is not a good match for these machines. If you have a different machine, I'd recommend you use it for FMQing. I have close to 30 machines and the 400/500's are my least favorite for free motion. The thickness of the thread has nothing to do with your issues as long as you're using a 12 or 14 needle... The horizontal bobbin and raised feed dog plate do not help with stitch quality.
Varigated thread can sometimes break in over dyed areas. I've never had any problems with YLI, though you may have also received a bad or old spool.
Last edited by Candace; 02-24-2013 at 08:16 PM.