Hi! I've had this happen to me many times and it is so very frustrating! First, take the bobbin out and also the bobbin assembly and clean the entire area of all lint, fuzz, little bits of thread....get it as clean as you can. Take out the upper thread too. Clean and oil. Change the needle. Make sure you're using the appropriate size and type of needle and thread for the fabric. Take off the needle plate and look for any nicks or scratches. If you've got them, you can get emery cloth from a good hardware store (often in the plumbing department) and polish them out (or mostly out).
Rethread the machine, carefully following the instruction manual. Use your basic, normal settings. Using a scrap of the fabric you're trying to gather, sew a seam and see if everything works ok. You may need to hold the top and bobbin thread firmly behind the needle as you sew the first few stitches (I find this little trick helps a lot to prevent birdsnests).
To gather, sew three parallel lines of long, basting stitches (you really don't need a special foot or special settings other than to make the stitch a long one). Don't backstitch, reverse, or lockstitch either end, and leave the thread long when you cut it. Pull the three bobbin threads and the fabric with gather nicely along them.
Something to keep in mind--if you're trying to gather very sheer fabric on a zigzag machine, you may need to replace the throat plate with the zigzag hole for a throat plate with a single, small hole for a straight stitch. I've run into this situation before, and ended up using one of my antique straight-stitch only machines to do the gathering.
If you don't have a throat plate with the single hole, you might try some light weight interfacing to give some density to the sheet fabric.
Hope this helps!
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