Hello Jen,
This up and down movement is something that I've seen to happen as the rack and pinion focuser reaches either end of its travel. I'd try moving the focus knob in or out slightly to avoid this. If you can't get a clear image, then try doing what the others suggested by moving the eyepiece out of the barlow slightly. Just make sure that the thumb screws are tight to avoid the lens falling out.
Hope this works for you.
Regards,
Glob.
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