First of all, I am glad I opened my machine because I forgot just how easily and nicely it treadles...I really should use it more often. Anyway, here are two things I learned about my Free...when I put the bobbin in the shuttle, the pointy end needs to be down, not sure why but that seemed to make a difference and mine only likes 100% cotton thread. These things only seemed to affect how it sews and the tension, not the problem you are having.
Are you sure you have the right shuttle? Also, the top thread should be making a little loop for the shuttle to go through to pick up the bobbin thread, make sure that is happening...if not I really can't offer any help. Is it threaded correctly?
Hope you are able to figure it out because it is a nice machine to sew on. My Free was the first treadle I bought, and I'm not really sure why except that I thought it was so pretty. It came with the instruction manual (less a couple of pages) and all the attachments...which I have never tried to use. It is in a parlor cabinet and the decals are in very good condition. Such cute machines.
Jp