I'm thinking that you probably are missing the tension release piece. I just found another machine like yours, that I forgot about at
Vintage Minnesota Treadle
Are you sure that the manual says to take the face plate off? The manuals that I've seen say just to oil on each side of the needle bar and the holes on the top of the machine. I have heard that it is extremely fussy to remove the face plate off Davis machines and get back together. I'm not sure if that is only the Davis Vertical Feed or it is all Davis machines that is boxy, like yours.
Janey - Neat people never make the exciting discoveries I do.