Tweak these settings...see if it helps or hinders....
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ph_iterations
The higher the value set to PH_ITERATIONS, the more accurate the solution will be (= less jittering) but calculations will also take longer. Try values in the range of 5 to 50.
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ph_setcorrections (var ERP, var CFM);
Sets global correction factors for the physis simulation. ERP stands for Error Reduction Parameter and defines how quickly misaligned constraints get adjusted. Setting ERP to 0 will have constrained objects drift apart after some time because errors get not corrected. With ERP set to its maximum value any constrained objects that get forced into an unacceptable position/orientation will be corrected within a single frame. This however can cause overshooting and it is thus recommended to use smaller values instead. Constraint Force Mixing on the other hand determines how much a constraint is allowed to be violated. Setting CFM to 0 results in very stiff joints (this will lead to errors though- do not do it). Setting CFM to its maximum value makes constrained objects act as though limited by rubber bands.
Jittering and overshooting are two likely culprits for the behaivior you are seeing. In effect what is happening is that for a frame, the calculation puts the object where it doesn't belong (say past the wall). If this is not corrected by the next frame, then the contact force of having an object embedded in another will cause explosions or the PE it will simply think that it is alright and calculate the next step, possibly sending it deeper into the wall and excacerbating the problem.
