It seems like the water temp needs to be quite a bit warmer than the target milk temp in order to reach the correct temperature. Generally I would rather be a few degrees under rather than over, so it makes me cautious!
If your stainless steel pan is a regular 24 gauge pan, then the temp difference should only be 1F before coagulation. It takes time though for the milk to reach that 1F differential, especially with so little water.
If your probe is in the water, then it most likely will touch the part of the advanco that is real close to the heater. If so, then maybe your probe is registering warmer temps too quick. Maybe try to stick the probe on the bottom (outside) of your pan? That way it's at it's closest to the milk as possible without being too close to the heater.
I have no experience with this type of setup. So, just a guess on my part. BTW, are those probes waterproof?