Looks like it's time to go back to the basics and start over again from there. Make sure the machine is threaded correctly. Do you have a manual? If no manual go to this thread. The groove on the needle should be facing the left end of the machine when seated in front of it. Twisting it one way or the other slightly can make a difference to how the hook picks off the loop. The typical needle / thread combinations are in this link.
In the photo you posted above, the knot is appearing at the top of the leather. That means the top tension is too high as compared to the bottom tension. How thick is the leather? It needs to be maybe 3 to 4 times the thickness of the thread to be able to hide the knot inside the leather. Try thicker leather and see how it behaves.
The skipped stitches (if the hook and needle bar are adjusted right) is because the loop is dissolving before the hook can catch it, or it is not forming large enough. If the presser foot pressure is too low, the leather can lift with the needle, thus no loop to catch.
Hope this helps you. Most of my machine problems have been of my own making. It sometimes take me quite a few test runs to properly adjust the tension when I change leather and thread sizes.
Tom