The blades on my Elna PRO 704 have stopped cutting - it looks like they are not close enough together

You may find something useful here:

Elna 704 instructions Google Search

Be sure to thread each in the ORDER specified--for most machines (but yours may differ) upper looper, lower looper, then needles. Follow (closely) the threading diagram on the machine. Missing one guide or hitting the guides out of order will throw you machine into a tizzy! On my serger, the lower looper has to lay over the top of the upper looper/thread before it all gets pulled under the presser foot toward the back of the machine.

It also may help to RAISE the presser foot when threading the machine.

Having problems threading my Elna Pro DE 4 sewing discussion topic...

Threading elna lock pro 4 DE green knob

research eBay, Craigslist, Etsy and other sales sites to find equivalents either sold or for sale...

Instruction Manual Elna 704DEX

https://docs.google.com/document/d/1TPuvb3cyHyctWIdeA6mUsij8kePwOUt60VowTFEvdos/edit

Serger terminology Threads Magazine Gatherings Forum Sewing Questions...

Elna Serger 704 DEX Instructional Video ELV 704DEX VHS 53M

Elna Pro 704 Dex Sewing Machine Instruction Manual

Threading Elna 704DEX Serger

Please provide the model of your machine.

Ok, it's a serger. Wondered why a sewing machine would be cutting unless it had the cut-n-sew accessory.

Most likely the blades are damaged or malfunctioning. Is the blade still moving when it is stitching? Is it just chomping away at the fabric but not cutting? If so, either or both blades need to be replaced. Consult your owner's manual. Usually only one blade can be installed without any technical knowledge. You can probably order the replacement blade and install it yourself. However, the other usually needs to be replaced by a knowledgeable technician because it requires some precision.

Has the blade stopped moving at all? If so, how long has it been since a thorough cleaning and oiling? Take it for service.

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A special stretch stitch is not required to sew stretchy fabric. All one needs is a zig-zag that is wide enough and close together enough to allow the fabric to stretch without breaking the stitching thread. (Test it on a piece of scrap fabric you are using, give it a good tug and see if the thread breaks.)

NOTE: be sure to use a ball-point needle. A sharp needle will tend to cut the fabric threads and your stretch fabric will eventually develop holes and runs commonly found in knits.

There doesn't appear to be a manual for your machine, however, you can usually find a manual close to your machine model and the instructions will be similar enough to suffice. Perhaps you will find one with instructions for sewing stretch fabric:

ELNA Other manuals

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All sergers have 2 blades. Just like scissors. Only 1 blade of scissor is sharp = not good cutting.

Make sure that the blades are being held firmly together. I have seen the knob used to lower the moving blade come loose and releases much of the pressure intended to hold the blades together.  If so, the set screws on knob have come loose.

Check to make sure you have the right size needle for sergers. Your blades may not be align properly.

For now, it works only satisfactorily:
I applied alcohol to further clean both blades,
dried and then oiled them. There seemed to be a slight gap between blades;
the fabric was dragged into the gap instead of being cut.