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Sounds fine. Many skirts have a curved hem, but if you're just doing a straight one, you should be able to use the hem of your tablecloth. Personally I stay away from dollar stores because cheap items don't last very long and that contributes to pollution, but if you will keep the skirt for a long time, then that's ok.
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Are you using the correct needle? Depending on what you are sewing you may need a special needle... Knit needle for jersey, and other stretchy fabric... you may be using the wrong size needle too. Does you machine have an instruction book? If so go to the section that matches needles with fabric type. If you are using the right needle, I'm not sure... you can also check your instruction book to ensure that all steps have been followed to produce an overlock stitch. Hope this helps a bit.