The first thing I would look at is the needle. Yes you can use a topstitch needle or Schmetz Embroidery needles. Is the needle in correctly. The FLAT part of the needle goes to the back of the machine. I have not had problems using C&C embroidery thread but some people do. Are you using the correct stablizer for the project? If the stitching is fairly dense you need heavy stablilizer or two layers of stabilizer. Are you using the correct hopping foot for embroidery? Tension for upper thread should be around 2 or 3. The bobbin thread should be THIN thread. Bobbin thread is highly recommended, but if you cannot find that you can use MAXILOCK serger thread. It may also help to heavily starch the fabric before embroidery.
Keep us posted on your progress