Hi Kathy,
That's a great machine! I own one, and it's one of my favorites to service. I'm a Bernina tech. at my day job.
When you take the top off of the machine, the handwheel will only turn by hand BACKWARDS. There's a "needle up" clutch on the handwheel that won't allow it to turn forward by hand. The clutch makes a noise every time the machine comes to a stop, as it calculates when the needle is in its highest position. Could that be the noise you hear?
The basting devise is the small knob on the left front of the machine. It will make the needle skip every-other stitch or every-third stitch. Not very practical, so Bernina didn't put it on very many models.
If it's gummed up, you can remove that old oil, and it will be a great machine for a long time to come. And its a real, solid work horse!
Let me know if that answered your questions. I'll check back.