Interesting. When I Googled, I found this feature mentioned everywhere for the Babylock Spirit. However, I could not find instructions for it in any of the online manuals. I am not familiar with your machine, but I did find some information online about automatic basting that may be useful to you. Apparently some machines require using a "basting file" to do the automatic basting around the hoop. Here is what I found that might help:
http://sewing.patternreview.com/Sewi...ns/topic/84083
http://sewing.patternreview.com/Sewi...ns/topic/74941
https://www.youtube.com/watch?v=Wn-0RTHGIfs
The following shows the automatic basting icon on a Bernina (click on the first photo to enlarge). Maybe you can find something similar on your Babylock.
http://dzgns.com/blog/2011/02/why-i-...sting-feature/