The machine was not picking up the bobbin thread so I lowered the needle a little it sews now but it is making a knocking noise. I raised the needle a little and it stopped making the noise but it skips a stitch now. I put a new needle but it didn't make a difference.
The knocking is the sound of your needle hitting somewhere in the bobbin mechanism. It's best to install the needle all the way up in the needle mechanism to avoid breaking a needle (possibly hurting you) and probably damaging the machine--causes needle/hook timing issues requiring service.
First thing to do when machine is malfunctioning (or making strange noises) = install a brand new needle. A bent, dull, or damaged needle is the frequent cause of sewing machine issues.
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The needle position is up tight in the holder and no where else
the cut away bit of the needle faces the bobbin case hook and the groove in the needle faces the end of the machine and gives clearance for the thread to pass through the material
from your description and what you did, the needle /hook timing needs adjusting as it is out
turn the machine over by hand as in sewing and watch the position of the eye of the needle and the bobbin case hook
just as the needle starts to move up, the hook should be just above the eye of the needle at the edge of the needle
The adjustment is by loosing off the screw on the vertical shaft at the end of the machine that is attached to an arm that moves the needle up and down and move that bit up or down until the needle is positioned correctly to the hook
tighten up the screw
next is to check the needle tension is not too tight
workshop manuals are available on line in pdf version or take it to a sewing machine repair shop for a proper diagnosis
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