This machine is capable of making real espresso, which is rare at the under $300 range for espresso machines. However, it requires manipulation in order to make real espresso.
First question you need to ask yourself is "do you own a decent burr grinder, or do you plan to buy one?"
If the answer is no: then this machine certainly can work for you, but you won't be drinking real espresso. Without a grinder, you'll want to keep the portafilter pressurized, as it comes when you buy it. This type of PPF aerates the coffee under pressure, to create bubbly "fake crema" which tastes quite wretched. No tamping is required when the PF is pressurized. If you're naive to espresso, drinking this slurry may not bother you. If this applies to you, you have a lot to learn. Enough said.
To make real espresso with this machine, first you must have at least an entry level burr grinder ($100-$150 range minimum, see capresso infinity or baratza). You'll also need a source of freshly roasted espresso beans, and be willing to spend on them (usually costs betwix $12-18 per lb). If both conditions are met, then you'll want to remove the pressurization component of the portafilter. simply take out the portafilter basket, unscrew the bottom screws on the pf, take it apart and pry out the pressurization device. stick a narrow metal object up through one of the spouts on the bottom of the pf, and push out the entire device inside the pf. I forget the details, but I know it's easy for anyone to do.
It is possible to put back the pressurization component into the portafilter. It's not incredibly hard, but when I had to put it back to sell the machine, the portafilter would no longer "spring back" when you loaded it into the machine. This doesn't affect making espresso, but just be aware that if you take out the pressurization component, it may not be as good as new when you put it back.
Alternatively, you could buy an extra non-pressurized portafilter for the machine, but these tend to be quite overpriced imo (~$50).
Now that you have a nonpressurized portafilter, you can learn how to brew espresso. you'll need to get a decent 53mm tamper and start tamping at around 30-40lbs of pressure. You'll need to find a fine enough grind size that works to give you a 20-30 second pull.
Regardless of what you end up making, if you meet these rough guidelines (buy burr grinder, depressurize pf, tamp, adjust grind to fine, and pull 20-30s shot) you will be making espresso that is leaps and bounds better than the aerated slurry that the pressurized portafilter could produce.
Yes, you can produce crema now, and every now and then a shot tastes decent if you have low standards. Don't fool yourself though, the quality ceiling is quite low for this machine, and is severely limited by your grinder quality.
If you invest in a $300 grinder, you can make some solid shots with this machine.
But I can guarantee you that once you have spent that much on a grinder, you will be struck with a case of upgraditis within less than a year, and will end up buying a better machine.
As for steaming milk:
Step 1: remove the panarello sleeve from the steam wand. Put it a drawer, you'll never use it again hopefully..
Step 2: you must must must (MUST!) not wait until the steam light goes off (or is it on? - i forget) before you start steaming milk..
You need to figure out how long to wait after flicking the steam button/switch before you should start steaming.
It goes like this
-Turn on steam switch, wait X seconds (30? 45? figure it out yourself) and then BEFORE the light changes (to indicate "readiness") you must purge the steam wand and start steaming your milk.
-If you wait until the steam indicator light goes off, you waited too long.. run off steam until the boiler light turns on again, then wait X seconds again and start steaming before it goes off again
-Figure out how long to wait between flicking the steam button and starting steaming, and this will keep the steam boiler ON while steaming which yields much more steam power and it doesn't waver as much.
If you were to wait until the steam indicator was "ready", the steam strength dies off after a short while and you cant make microfoam or steam larger amounts of milk.
Now you're set.
Fun learning machine. I learned a fair bit from my travels in the land of Saeco Aroma.
I have now moved on, but I look back with fondness upon my relationship with this machine.