Is this your router? The model number isn't the same but it's close.
If so, the knob is a locking knob and the ring is your fine adjustment. If the locking knob is tight, the ring just spins up and down the thread on the motor housing. If the locking knob is loose, the motor housing will follow it up and down.
Now, to use this thing upside down, as on a router table: You set the bit height, tighten the lock knob and run the job. To raise the bit, you turn the adjustment ring the appropriate amount (there are calibrations on the ring) support the router, loosen the knob and lift the router straight up against the ring and tighten the knob. To lower the bit, you can just loosen the lock knob and turn the ring, the weight of the router will hold it against the adjustment ring.
In any case the locking knob must be tight when running the machine. If the router slips while the knob is tight, either the channel the knob bottoms out in is wore out or, some have an "alignment key" that the knob tightens against to lock down, that may be missing.
I may be backwards about setting bit height under a table on this one. Never did use the router on a table and it's been 7 or 8 years since I used it at all, and not much then. Been using it for a doorstop, not even to good at that job.
The problem with experience is I usually get it immediately after I need it.