Hi Mishap.
I know what you mean about the reel of thread jumping about because you can't put the plastic cap thingy on. When I first had my machine, I didn't even realize that you were meant to put that on (I did wonder what it was for though!), and at times the reel made a lot of noise as it jumped about. However, apart from the noise, mine didn't cause any other problems.
I hope you don't mind my asking, but have you double / triple / quadruple checked that you are threading the machine correctly? Aside from the jumpy reel, the problem sounds typical of a wrongly-threaded machine.
I'm sure you will have checked that already, but thought I'd better mention it just in case
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