As far as I could figure it out, the problem lay with the control board. No matter what settings I tried, the cutting head kept on trying to move off the cutting surface and the motors would not respond correctly. This of course resulted in horrible grinding noises as the belts were chewed up. See the video below.
It was disappointing. Since I had the machine for a month I contacted the seller on eBay and asked for a refund. At first they wanted to pay to get a technician in to check the machine, but after showing them the video above, they agreed for me to return the machine to them. In very broken English mind you...
Thank you for your message.
my dear customer,please don't worry about that,we promise you ,we will help you to solve this problem, we will respect your choice ,
the return address
please check it ,If you have any question and problem,please don't hesitate to contact us ,we will reply you as soon as possible ,thank you so much .
have a wonderful day!
All the best !
It went back-and-forth like this over dozens of messages but eventually I managed to get all the correct shipping information from them to arrange a courier back and about a week later I received my refund including the courier fees.
The only thing I had to do was find another big box and packing materials. I think my packaging was actually better than how it was done from the factory...
I was offered a replacement machine, but declined. Would I bother getting another cheap laser cutter any time soon? The answer to that is no. I think given the demand and the number of Kickstarter projects going around there won't be any of these cheap half-baked machines within the next few years' time. I am happy to just wait it out and in the meantime go to a laser cutting shop instead.