Check the height of your presser foot for the embroidery mode. I had this same experience once and it turned out that my presser foot height had been moved from the default setting. I don't know how it happened.....embroidery machine gremlins, I think. The only other thought is....could it be the battilizer. I have never worked with that; maybe try one block with standard batting. I feel your frustration as I have been in your place. Hope your problem is resolved soon.