fermentation chamber issue

I built a fermentation chamber out of an old dorm fridge, wood, and insulation. The problem I am having is condensation on the fridge cooling cools. The metal freezes up, then melts, then freezes up, melts, etc. There is no catch basin so the water generally falls on top of the buckets or onto towels I have put under the buckets. I left the last towels in to long and they had mold on them. Anyone have any suggestions? I am seriously thinking of just buying a chest freezer but I put some money and time into building this chamber.

If you're getting condensation and then ice it is most likely due to an air leak in your chamber. You need to seal up your chamber better. Even then you will still get some condensation because the beer is pretty humid when it ferments. Install a pc fan in there to blow across the coils and get some damp rid in there. Like this:

Does the fan run the entire time?

Yep, non stop. They are 12V DC computer fan so they don't use much juice or get hot or anything. Some people switch theirs on with the compressor, but IMO you need air circulation constantly.