You might check to see if the gears are OK, if they are plastic they might be worn out. There are 2 gears underneath that work the feed dogs and the bobbin area. The knob is for raising and lowering the feed dogs. It also looks like your bobbin winder in is the winding position. Move it to the left for sewing and to the right for winding the bobbin.

my new little machine doesnt have the drop feed dogs. I know it has a broken gear and it is on order. :-) I figured for three bucks it was basically a steal. the gear was about 7 with free shipping on ebay. so all in all i got the machine for 10. I was wondering if this motor needed oil and how to go about doing it. considering it isnt a bolt on motor.