OK, let's see if I can be a little less muddled about this. I'll be restating a lot, but that's just trying to be crystal clear and not to imply anything.
To begin with, when you first encounter the belt it's running downwards. That means, if Manny climbs up onto it and stands still, the belt will carry him toward the edge.
If you flip the switch beside the belt, the belt will then run upwards. Meaning, if Manny gets on the belt and stands still, it'll carry him to the surface (and the crane).
But, when you're at the beginning of the factory island segment, you DON'T want to flip the switch! Just stay away from it!
The fact is, there's really no reason to go up on the belt before the game makes it unavoidable. So, staying away from it is a good idea, especially if you have a very fast computer. But if you do want to go onto the belt early on (you have a touching but irrelevant reunion with Glottis if you do), your only hope of getting off again is to have the belt running downwards.
If, like Snowdrop, you want to go up the belt when it's running downwards, you must run up it. And if on the slight chance you don't know how, that means hold down a SHIFT key while holding down the UP ARROW key. If Manny runs, he can get up the belt if it's running downwards.
It looks as if Snowdrop has done most of what's needed at the factory island. So what comes next is going to be something of a spoiler. I'm going to outline the most stress-free way through the factory island. What's below assumes you've done just about everything but are stuck on the belt. Okay...
First, like I said, leave that switch alone. Go through the cutscene about meeting Meche and getting clobbered by Domino. Talk to the kids and get the tiny hammer. Talk to Meche and learn of her desire for a gun. Fiddle with the ashtray to get the stockings. Talk to Chepito to get a gun and his Bust-all. Give gun to Meche. Break into vault. Escape from vault. This is the point when the belt is unavoidable. Go to crane. Before moving crane, lower chain. Leave crane and use Bust-all on scoop. Go back to crane, lower chain and rip out coral crushers. Move crane to other side of island. Lower chain again. Because the belt is running downwards, the chain will run along the length to the edge. Once this happens you can go up and down the belt with ease no matter how fast your computer is. Go see Glottis now if you want. Otherwise, now is the time to fiddle with the switch. Once the chain is moved to where it needs to be, you can use the crain to raise the ship.
If you flip the switch too soon, the chain will bunch up at the top of the belt and once you go down the belt in this situation you'll never get off (if you have a fast machine--under 400 MHz it can be done, but not over).
With luck this'll clear everything up.