1) Yes styrofoam works wonders
2) T-stat probes go in the egg box
3) You will want to install some kind of small fan to circulate the air
4) You will want to line the bottom of the box with 20oz water bottles (filled) to stabilize the temperature. water has a very high heat capacity, so when it gets warmed up to a target temperature, it tends to moderate the temperature in the immediate vicinity quite nicely. Even just three water bottles will help greatly. This will minimize any temperature fluctuations as your t-stat does its job, and will help prevent massive heat fluctuations if you have to open your incubator.
5) If it were me, I'd have the heating element on the bottom, water bottles on or above the heating element, and any egg boxes on a suspended wire shelf above the water bottles