You are making good progress on your machine! The manual says there is a 6 sided nut underneath that will enable you to raise and lower the feed dogs, so that must be it. Mine also has a slight clicking noise in the feed dog area (with no fabric), but nothing too alarming. I figure it may go away (or lessen) with more use/cleaning/oiling as I can't (yet) see what is causing the clicking noise.
Do you know what type of wood was used for the base? Someone told me walnut, but not sure that is right.