Do this remove of the ash from the pot and let start the grill over. If you have chimney stack make sure there is a 1.5 inch gap between the cap and the pipe and make sure the grill is on a level surface. Fill the hopper up and do the start up process by setting to smoke and leave the lid open.
With an empty pot you can hear the pellets falling into the pot and wait till the smokes start coming up and then when you hear the fan and roar of the flame make sure the smoke as stopped. Now close the lid and do not change the setting yet let sit at smoke for 5 minutes.
After 5 minutes set the temp to 350 and then let it run for 15 - 20 minutes and then check the temp on the controller. The hood temp I am not worried about you have to remember the controller is not a PID controller you going to have 1 -25 degree swings at any point during your cook.
Now you should see the temp to start to settle down and get to 350 and it may drop to 348 and may jump to 375, but it will not remain at 375 for long it will drop this is due to the auger controlling the temp not the fan.
Now after all this and you are seeing a temp reading on the controller like 475 to 500 then the controller or the RTD Grill probe is bad. Now for the paint peeling around the firebox mine did the same it does not effect the grill at all.
It seems based on the last 4 weeks of new Pit Boss owners I am seeing a high number of issues with the grills and I am worried since these grills are made in China that they rushed the manufacturing to keep up with the demand and ignore quality control.
I was told that there customer service is now back to normal staff, but they are dealing with high number of cases and product issues.