I'll have to take another look on one of my own machines, and I will have a better idea.  It's been a little while, but what I find I will pass along.

OK, I see what you're talking about. There is an adjusting screw with locknut that's apparently the top end of the bolt onto which the castle nut is threaded. Turning the castle nut clockwise acts to start backing out the locknut up at the top of the bolt. Obviously that locknut needs to be tightened down enough such that it won't back out when I'm turning the castle nut down below. Maybe some sort of Loctite adhesive is also called for to prevent it backing out -- though there must be some reason why the bolt has a slotted adjustment and locknut in the first place.

The locknut looks pretty small (though I think I have a driver that should fit), but the problem is that the locknut is not accessible -- somehow I would have to remove the disc on which the ribbon spool sits in order to be able to get a purchase on the locknut. I see no way how to remove that disc, at least nothing looks obvious.

I will check -- I do know that the disc is metal, not plastic, on mine.

The locknuts/jamnuts wouldn't be the way to adjust the vertical alignment of upper and lower case characters, would it? And the castle nuts adjust horizontal alignment?

I'll take a look inside my Touch-Masters and see what the lay of the land is there.  It's been so long since I've adjusted one there, but I will bet that if you turn the ribbon spool spindles the right way, you can access those slotted nuts.  The spindles have a notch cut into them, but I'm thinking you'll have to have a small socket, or nut driver to get in there.  I'll see and report back.