Here is an article that explains thread tension:
http://www.threadsmagazine.com/item/...nsion/page/all
You really need to understand how to adjust bobbin tension as well as top tension. Having the thread lay flat on the top means the top tension is too tight in relation to the bobbin; either the bobbin tension needs to be tightened or the top tension needs to be loosened.
Are you trying to free-motion quilt? Or just sew? There is no reason why your needle should be breaking if you are piecing. If that is the case, there is a high probability that you are inserting the new needle incorrectly. Usually on vintage machines the flat side of the needle shaft faces the rear of your machine. You also need to be careful that the needle is inserted all of the way up. To test a new needle, turn the wheel of your machine by hand to make a few stitches. Watch the needle tip carefully to make sure it is not bending or hitting anything.
Although this video about adjusting tension was made for longarm machines, it works well for domestic machines and regular sewing as well:
http://www.youtube.com/watch?v=Q1mRhcquZTM
Incidentally, having a piece of lint stuck somewhere in the bobbin area or in the top tension area will change the tension on your machine. You need to be diligent about cleaning. How often do you oil your machine?