Well the thread should be fine. I think the spool cap should be on the other way up according to your instruction manual. I’m not so clued up with Berninas as some other makes. But it should be held enough so it doesn’t really wobble up and down. Have you got your foam pad on before the thread? Sew a design, not lettering, and see how that goes. Are you using embroidery needles? Are you sure it’s threaded correctly?
Just gone back and read your original post. Are you using a sticky stabiliser? There are all sorts of things that cause problems.
How does the machine perform on normal sewing? That’s always a good test. Try straight stitch and a zig zag. That was always the first way we tested them when I was at the shop.
And no, embroidery only machines aren’t necessarily better than a combination machine. I use a combination, actually have two
, but I’ve also had a dedicated embroidery machine too.