For knits with lycra in, you are best to thread up four threads and seam with the 4 thread marrowing stitch like this, preferabbly with ball point needles in your overlocker, size 80. Use cones of polyester thread, 3,000 metres or 5,000 metres rather than normal thread. (Although if you have trouble matching thread colours you can use a small reel on the left needle as this is the thread that will show on the right side of the garment.)
Start with your machine tensions on 5, both needles in and threaded, stitch length of 2.5 and no differential (set it on zero) and test stitch. Using stretch or ballpoint needles is a good idea too to avoid any deflection and skipped stitches. Then practice serging on some fabric scraps, double layer and look at the seam, if it is tunnelling (pulling up the fabric), then move the cutting blade to the left. Test again and if still tunnelling, then loosen off the tension on the top and bottom loopers by a half number and test again.
If the opposite is happening and the threads are looping off the edge of the fabric, then move the cutting blade to the right to trim less fabric, test again. If still too loose, then tighten up the top and bottom looper tensions by a small amount and test again.
You want the seam to lie flat, the two looper threads to meet right on the cut edge and the needle thread to be just visible from the right side when you press open the seam.
There is always a small amount of adjustments needed on an overlocker when setting up for a new project as every fabric will behave differently. Don't tighten up the tension on the needles much past 5 though, or you may get thread breakage.
If you find that the seam is flutting then you can use the differential feed to adjust for this too.
There is some good overlocking info on Debbie Cosgroves website, www.sewing.about.com
, with images which may help too.