Yes the presser foot is off. I've got it as light as I can and it still is too low. I have the 500 service manual from the sewing dude. It says it should be 5/16" from the bed of the machine. I'm pretty sure that mine is measuring 1/4". Also, the foot is slightly off square. I'm going to try another foot and measure again before I tackle this. And, yes the feed dogs can be off alignment, too. Gypsydreamer, I apologize. I did not know nearly as much as I thought.
Does anyone have a good copy of page 5 and 6 of the service manual for the 500? Mine is a copy and the drawings are not as clear as I would like. I'd like to know for sure which screws they are referencing.
bkay