The knob with a set screw is a needle valve that controls how fast the 3 point goes down. If you screw it all the way in tight, the 3 point won't lower at all, but it will still go up just fine. This knob is used to keep heavy implements from "slamming" down too fast or to allow lighter implements to go down faster. The 3 point down only works by gravity.
Your problem is not lifting a load and would not be part of the knob's function. Several things come to mind as possible causes.
Low fluid.... you checked that already
Low hydraulic pressure. Do you have power steering or a front end loader? Do they function properly?
There is a pressure relief valve built into the 3 point control. Most of them are set by adding or removing shims under the spring to adjust the pressure. Old springs can loose tension and let the fluid bypass before proper pressure is reached. You would need to add a shim or two to tighten up the relief valve for higher pressure.
Dirt or debris can get caught in the relief valve between the valve face and seat, this leads to leaking fluid and lower pressure. The same is true if the valve or seat is worn excessively.
Remaining items are worn out or leaking 3 point control valve and or a leaking seal on the piston of the 3 point cylinder. These are more work to get to but not terribly difficult.
Do you have a parts list for your tractor?
Hope this helps. Ask more questions of it didn't.