Hi FORDTECH,
I'm a little late to this party, but what the heck. It looks like you are getting things somewhat worked out. Full disclosure statement: I don't have a Smoke Hollow. I have a Smokin-It #2 (electric Cookshack clone) and have extensive experience with it.
I have a few key thoughts and recommendations that have already been mentioned but I will echo because I am just sitting here drinking cup of coffee #2 and what the hell:
1- Forget the probes and temp readings on the Smoke Hollow. It could be the probes, the sensor or both that are off. If you have a good dual probe (sounds like you do) and you checked it in boiling water, this is your gospel temp reading. Put that probe somewhere around the meat and go with that. If you have to set the Smoke Hollow to 500* to get 250* at your probe, so be it.
2- Forget he water pan. Insulated box smokers retain a ton of moisture and the water pan is just causing unnecessary excess moisture. It will affect bark formation and possibly make it harder to get temps higher. High end electric smokers don't even have water pans. You may be able to put some wood chunks in the water pan, wrapped in foil to prevent them from possibly catching fire inside your smoker, and see if they smolder. Then you could maybe use chunks and not have to add chips every hour.
3-The black liquid is likely nothing to worry about, but if you can identify exactly where in the cook chamber it is coming from you can seal that with high temp RTV silicone, as I think someone else mentioned already. However, it may be difficult to pinpoint where it is coming from since it could be condensation and may actually be from the top of the cook chamber leaking down the inside walls and out the bottom, though probably not.
You can make some really nice Q in that smoker. Like any smoker it will be a learning curve. They all have a learning curve.