How can I sew freehand with a Brother Special Edition XL5700? Also, how to access the stitches 12-21?

Something is not right. You have done all the correct practices to alleviate the problem. It is time to take it to a professional.

A manual feed is used primarily in freehand embroidery, quilting, and shoe repair. With manual feed, the stitch length and direction is controlled entirely by the motion of the material being sewn. Frequently some form of hoop or stabilizing material is used with fabric to keep the material under proper tension and aid in moving it around. Most household machines can be set for manual feed by disengaging the drop feed dogs. Most industrial machines can not be used for manual feed without actually removing the feed dogs.

take the machine back & get another one

you said you took out the needle, when you put the needle back in
did you turn the needle the right way as you were inserting it into the
needle holder

try changing the needle first--make sure the needle is the correct one for the fabric being sewed.
if you've adjusted the top tension & the bottom stitch still looks the same
it's possible that the top tension dial is needing to be checked to see if it's
working correctly

if the bobbin stitch is loose tighten the top thread tension one number at a time & sew alittle bit & if it's still loose tighten it one more number till you get the correct stitch

have you checked the needle to make sure it's in correctly--flat side of needle goes to the back of the machine

correct needle insertion is mandatory for the proper use in your sewing machine. Raise the needle bar to the highest point, then loosen the needle clamp screw to remove the old needle.
place the new needle in the needle clamp with the flat side of the needle facing the back (or if using a round needle the groove in the needle should be facing away from the shaft.
push the needle all the way up to the stop, or as far as it will go, then tighten the needle clamp screw.

how to decide which needle is correct to sew with, it depends on the fabric & thread being used for the project.
like for example, I've been sewing for over 30 years, I'm sewing a stretchy fabric & regular needles won't work because they skip stitches & will pull the fabric thus damaging the fabric, the needle I have to use is a singer universal ball point needles, & I have no problem with the stitches they come out fine.

You should be able to find everything you need including the manual here:

http://www.brother.com.au/product/sewing_machines/xl-5700/support.aspx

Sorry someone has not responded sooner.

Hi, well YES you DO need a special Foot, it is called, surprisingly enough a Genuine Brother® Accessory Blind Stitch Foot.
You can get it from Brother itself.
http://www.brothermall.com/(X(1)S(0kf1qc55ki4u0fvfmeftoz55))/Accessories/AccessoryList.aspx?Model=ce5500prw&ACASCID=39
Or I found a supplier below...
http://www.amazon.com/Brother-SA134-Blind-Stitch-Vertical/dp/B0007XOEWA

The brother website has a users manual for it that can be downloaded. Use this link to get it:

http://welcome.solutions.brother.com/bsc/public/us/us/en/doc/manual_index.html?reg=us&c=us&lang=en&prod=hf_ls2125eus&type2=5&flang=English&dlid=