TL;DR; Remove the outer panarello leaving just the inner steam tip. Turn the jug at a 45 degree angle and try to get the milk to spin round in a vortex.
Detail: The panarello brings in extra air to make the frothing and steaming of the milk a much more consistent, reliable process. Unfortunately, from a latte perspective, the bubbles end up being too big and are more suited to frothy cappuccino.
I have had this machine for two years and had given up on any chance of proper latte art. Then, in searching for supporting evidence before answering you, I found this Magnifica review where the reviewer says:
The popular option with domestic Espresso machines are panarello
wands, a sheath which covers the steam pipe and introduces steam to
the milk via holes on the side. ... They produce only large bubbled
froth, to be spooned into cappuccino – which is fine if that’s what
If, however, you’re wanting to produce lovely, shiny microfoam, with
much smaller bubbles, for making delicious velvety flat whites,
cortado/piccolo, macchiato, latte or cappuccino, and to have a go at
pouring latte art, then panarello isn’t going to work for you.
De’Longhi have recognized this, and they have made it very easy to
simply pull off the panarello to reveal the plastic steam pipe, which
is essentially a single hole steam tip steam wand, or at least works
in a similar fashion.
In truth, it's doubtful that this was actually De'Longhi's intention. Without the outer panarello screwed in, the steam tip is held in place only by friction and - at least once it has been removed and replaced a few times - will frequently pop out from the pressure of the steam. Trying to hold it in place with your thumb or finger is tricky, risks burning your hand and (most importantly!) distracts you from keeping the milk jug in the right place.
I've tried it a few times and the results have been mixed. Microfoam is certainly more achievable, but so is completely flat, textureless milk! However, there's enough potential there that I'm going to spend a small amount of money on a new panarello and then cut it shorter with a saw so that it can hold the tip in place without adding unnecessary extra air to the milk.
Edit: Rather than cutting anything, you could also put your finger over the little dimple through which air is added. Still be careful of touching the hot chrome arm.