hey, john - welcome to the SMF ~ we'll see if we can get some answers to your good questions. here are a few suggestions based on my experiences.
first, trust the people who say never trust the sstock thermometer or heat indicator. even if it is accurate (which is usually not likely), chances are that it is not at meat level. many of them are far above the meat and what you get is a temperature that is far below what you need it to be - judging by the differences in your temp indications, this may be the case.
trust your digiprobe, assuming that it is calibrated and reading correctly. a good way to test this is to stick the probe into boiling water, not touching the pan. it should read at the boiling temperature FOR YOUR ELEVATION (a conversion cahrt for this can be looked up on the internet); where i live, this is 207.8 degrees and my thermometer reads dead on. you can also make an ice slurry and stick the probe in there, it should read very, very close to 32 degrees (i think mine reads 32.5, IIRC).
you want to smoke at around 225 degrees, but this is not set in stone. if it is at 220 for a while, it's no big deal. i myself prefer to smoke at around 250 degrees as i believe the meat takes on some great flavors at around this cooking temperature. there is actually a term for this addition of flavor that i saw on the food network, but i'll be danged if i remember what it is. all i know is that it seems to happen better when cooking at 350 rather than at 225. my opinion is that at 225, the meat can dry out a bit and leave you you with the beginnings of pork jerky. opinions vary on this, but the best thing to know is that you will be fine if smoking anywhere between 220 and 260. most prefer 225, some prefer 250.
as far as foiling, i prefer not to but there is nothing wrong with doing so. the only time i foil is when the meat is done and has reached a temp of 190 or so (200 is actually a bit better, but i never can seem to wait that long), then i foil it and wrap it in towels and set it in a cooler for at least a half hour and it can be there as long as the internal temps are above 140 degrees. you need to let your meat reast at leat a half hour, or it will turn an ungly brown when you slice/pull/shred it and, even worse, all the juices will run out.
hope this helps - be sure to ask any follow-up questions you might have and keep us posted. q-view is also great as it helps you learn and makes us drool. lastly, it would be a good idea to pick up the knowledge that can be found in the BBQFAQ. this is a word document that you can download to your desktop and refer to any time. there is a ton of information here, and you can read it all or simply skip to what you need. here is a link to a download of a SAFE zip file for the word document:http://www.eaglequest.com/~bbq/faq2-w97.zip