Are you using a fixed time step? (You should be)
Is your time step below 1/60th of a second. (smaller is better)
Are you using at least 10 solver iterations? (more is better)
Try using a fixed time step of 1/180 and, 30 iterations. Your simulation should be rock solid stable with those settings. If it's not, then something else is still wrong. If that works, try scaling the values back until you have something that works without eating all of your CPU.
Can't sleep... Chipmunks will eat me...
Check out our latest projects! -> http://howlingmoonsoftware.com/wordpress/