I wish I could give you some useful advice. My Mom had a Handi-stitch and electric scissors when I was a kid in the 70's. A few years ago I came across a Handi-stitch on Ebay (used) and bought it mostly out of pure nostalgia.
I could not get the thing to function in any useful way. I could have been due to it being used (really, how many out there haven't been by now?
), but somehow I doubt it. I have a feeling they were all about the novelty ala the "Pocket Fisherman" than any real usefulness.
Mine just clackety-clacked away like it wanted to be sewing, but the whole trouble-shooting section of the manual read like how mine "worked". It finally went to the dump in our last move.
It's been awhile so I can't remember how the thing works but from looking at the manual, it's not apparent to me at all where the bobbin comes into play. I know mine came with a few. It shows putting the spool in the bobbins place. Without a bobbin, you can't "have" a complete stitch. *scratches head*
Sorry for the non-help, hope you have better luck with yours than I did with mine.