The needle is inserted flat side to the left, and threads right to left.
The other problem sounds like the most common 201 issue: The machine can get a load of thread tangled under the bobbin case before it stops working and it sounds like you've just hit that point.
Can you easily pull the bobbin thread through the throat plate? It should always be looser than the top thread. If you can't, the tension spring probably needs to be adjusted.
I bought one about a year ago that had a huge tangle of thread and dust bunnies underneath the bobbin. Disassembly of the case is pretty simple, and if you do this, lubricate as you reassemble.
Don't worry though, 201s are one of the toughest machines every made, so you won't have broken it permanently.