Overlocker tension discs threading
Overlock machines (aka sergers) can be very fickle depending on the fabric that you are using. It is a must to have your manual near by and scraps of fabric to sample before starting your project. Especially since a serger will cut the fabric edges when the knife is in place. 

Your manual will give you alternate settings and tips for the tension knobs that you show in your picture as well as the feed dog tension. You can also play with the tension to make the serged edges ruffle, especially with knits.

ALSO, be careful with knits! They can really mess up a machine - don't pull or push the fabric in, always let the feed dogs take the knit material.