Gail,
You just described the exact same problem I had with the top tension on my 127. The beehive spring was just too strong. The only way I could get the machine to sew was to remove the nut. Same as your machine.
I finally took the machine to my LSMG who has a box full of tension springs and picked through them till I found one that would give me the needed tension with the knob on and adjustable.
It's my "theory" that the thread used back then was so much different than what we have today, that the tension used were much tighter. All I can suggest is hunt down a lighter spring.
Joe