More pictures - that part that "wraps around" the thread guide would be important -
Here it is, needle all the way up, and you can see how this would cause the "tension" to be engaged by the thread.
All the way down.
BTW - if you locate a donor machine, I need the needle plate (or what ever it's called) Mine has a bent corner, does not hurt function but I'd replace it if I got the chance.