Looping on the underside is usually your top thread coming through as its not under tension correctly. So rethread the top of the machine carefully, checking your threading diagram in the manual and checking the thread is going between the tension discs carefully.
You also should clean between the tension discs regularly as thread sheds dye particles and fine fibres and this will build up with time. Turn tension dial to zero, then carefully slide in the selvage edge of a piece of waste cotton and slide it back and forwards between the discs carefully to remove any buildup.
Now turn tension dial back to the medium number, usually 4 or 5 is the recommended setting, and rethread top and bottom as per your manual threading diagram, and try again.
There is good general machine maintenance and threading information at
www.sewing.about.com, however if the above fails to improve the situation, then perhaps the top tension device has failed and needs replacing.
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