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Franklin,
You can check the readings by putting the thermocouple into a cup of melting ice (lots of ice with water surrounding the ice) and the controller should read 0C (32F) and into boiling water 100C (212F). This should give you an idea of if the calibration is way off. If you restored factory settings, it probably isn't too far off.
Have you tuned the controller? When tuning, you need to tune around the expected setpoint. i.e. don't autotune at 200F and expect the tuning to hold at 2000F.
I've typically tuned this generation of watlow controllers manually because the autotune makes the output hyperactive. They have a decent procedure on manual tuning in the controller manual
A 40F steady state droop seems to me that the PID settings is mostly Proportional Band and you might need a little Integral (Reset) to close the error. The Derivative will affect how fast the system gets back on the gas back to the set point after a change....like when you open the lid. Too much makes is really slow to get back to the setpoint. Too little makes it overshoot the setpoint.
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