The thread may not be strong enough to handle free-motion. I personally would not use that thread in my Bernina simply because cheap thread tends to be linty, and I'd like to keep my machine as lint-free as possible. What exactly is on the thread spool in terms of information? I went to the Walmart site online, but they have many different threads there; I didn't see any that were $1/spool.
What size needle is in your machine? Typically you want to go up a size when FMQing, and using a topstitch needle in a larger size helps too. Sounds like your thread is shredding. Most people don't realize that any single portion of the top thread goes in and out of the needle quite a few times. This is how the thread starts shredding when the needle is too small and/or the thread is not strong enough.
Last edited by Prism99; 11-30-2013 at 04:29 PM.