Forgot to ask; is this a forced air or still air incubator? I believe the latter is more prone to spikes in temperature (also, if it is the latter then there should be cold and warm spots, i.e maybe some areas are better/worse than others)
Throw in the towel? Only to cover the bator I hope :(
How long does it stay at 42C? And does it still spike to 42C? How close to the top of the eggs is the sensor? As JaeG pointed out - it is the egg temperature we're aiming for, not the bator itself - so if the 42C-spikes are short then maybe...
Yes, the insulation-thingie :)
I'm a noob, but my cheap chinese one fluctates with +/- 0.5 degree C so your one sounds on the wobly side to me. There isn't a setting you can change for it? It surely should not allow itself to go as high as 42
Maybe you could keep a (closed) bottle or container...
Most cheap (i.e chinese) incubators comes with styrofoam - have you thrown that away? Many of them NEEDS to be in that styrofoam (just make sure the vent-holes aren't covered), especially if you aren't incubating inside your house.