Hello, I had this very exact same problem and equipment. Tried everything finally realized the rubber round stitch circles that run along the track carriage system, (the blue ones there are two, Gracie calls it the encoder, not the metal ones) that send the signal to the stitch controller were up in the air and not make contact with the carriage. This was sending spurious signals to the stitch regulator and activating the thread cutter. Also noticed that when I moved slowly stitches kept getting bigger instead of slower and everything was clunky. FIX is to move those rubber sensors, the encoders, so they make contact with the carriage. Here is the paragraph from the instructions: "Angle the encoder until it touches the track and tighten the Socket Head Screw until the encoder is securely attached so that it can’t wiggle. Make sure that the encoder wheel is the only part that contacts any part of the carriage. When the bottom plate is sitting upright, the encoder should be angled up slightly, so that the encoder’s wheel touches track on the quilting frame and the spring on the encoder is partially compressed."