Looping of stitching on the reverse of the material.

Looping stitches can be caused by a few different factors. Make sure that your machine is threaded correctly. If the top thread or bobbin thread is improperly threaded it can cause looping stitches. ... Loose thread tension will create loose loops of thread that can cause the needle to catch and create more of a mess.
https://www.madeirausa.com/services/troubleshooting/fabric-puckering/

Be sure presser foot (embroidery foot) is fully lowered or tension discs will not fully mate. There should be notable difference in tension with foot up verses foot down as you pull on top thread?

the looping on the bottom usually is a tension problem, the top & bottom tension are unequal usually fixed by adjusting the top tension.
some people that I've talked with have had success with changing to a different size needle ( depends what type of thread is being used).
when the machine is threaded the foot needs to be up ( this releases tension on the thread), when the foot is lowered it the tension is set on the thread. if the material being sewed is too thick it raises the foot too high & releases tension on the thread ( the material has to be really thick to do this).
if there a piece of thread or lint in or around the tensioner or bobbin area it could cause trouble.
other wise if you've tried everything you can think of, take it back th the store & have them try it & tell you what is wrong.

also this machine has bad reviews (i'll provide a link so you can read them), people having the same problems as you are. the newer singers just don't seem to be the same quality tha the older ones were.
all bad reviews
http://www.amazon.com/Singer-5400-60-stitch-Sewing-Machine/product-reviews/B007ZG9DTQ/ref=cm_cr_pr_btm_link_1?ie=UTF8&showViewpoints=0&sortBy=byRankDescending
mixed reviews
http://reviews.walmart.com/1336/20573406/singer-5400-sew-mate-60-stitch-sewing-machine-5400-reviews/reviews.htm

try a new needle
try a different thread top and bobbin
try adjusting the top thread tension one number or letter at a time
higher sewing on a scrap piece of paper till the stitches look
normal
make sure the top thread does not come off the thread take up lever

change the needle
make sure the bobbin is inserted correctly into the bobbin case
make sure the top thread has not come off the thread take up lever
also try adjusting the top thread tension

Check the tension on your bobbin thread. When you hold it by the thread and let it dangle does it just drop down without any resistance at all? If so then you need to tighten it a bit. If the bobbin thread is too loose it can not pull the top thread down enough thus puts the loops on the top side of the stitch.

looping the material ( bird nesting) is an indication of incorrect needle thread tension before threading the needle pull the thread and there should be resistance to the pulling

check that you have threaded it right

Well is your machine skipping stitches? "Not looping" does that mean not creating a stitch? To adjust your bottom stitch you usually adjust the top tension regulator. I can try to help you more in detail check out my forums http://www.sewingmachineryrepair.com/forums/index.php

Make sure the thread is in the tension disks. Do this by pulling the thread backwards towards the spools. Also set the tension on zero and check for any fluff, or thread that is stuck in the disks, preventing them from closing properly. Good luck