Mickey2

Tripple check that the needle is put in the correct way, flat side to the right, just in case. Even double check that the manual is the correct one, I've seen machines equipped with the wrong manual a few times too, could easily be missed if one assumes it's the right one.

If the needle enters the hole in the needle plate with clearence it's likely as it should. I have been wondering about the same, on my machien the needle is slightly to the left in the hole in the needle plate. It never interferes with the presser foot though. Stitch length adjustment for the 201 is a lever, what type of stich adjustment do you mean? If there's a knob or screw there, it might be a model 66 or something else.

On my machine I have to turn up tension quite high on heavier threads like top stitch and extra strength. I even have it high up when free motion quilting, and I hear others have much lighter tension then. If you have a medium weight thread, sew-it-all type, you can set top tension to 4 or 4.5, then adjust bobbin tension for an even stitch. If you can turn the dial from 1 to 9 with ease and you can feel the tension gradually increase as you turn the dial it's likely fine (fully threaded machine and just pulling the tread through the needle, presser foot has to be down). If the machien was very grimy and dirty when you got it, the tensioner might benefit from a disassembly and cleaning of the parts; it's often enought to floss between the two plates in the tensioner with a thin rag or cotton yarn.

There is a neat way to set bobbin tension, by using a 1 oz. weight. I've just ordered one, I'm not quite trusting my kitchen scale filling a bag with beans, peas or rice.

If all this fails, there are adjustments for repositioning the needle bar, and I would suggest looking up a service manual for the 201. It's available on the web. You will have to set timing in relation to hook and race.

I'm sure your issue will be sorted out, there's are some very experienced members on this forum and great help to be found.