Yeah I had that too. I actually put the rubber gasket that came with the spigot back in, and then put it back together again. No leaks! I think it should be able to stand up to the heat as good as an o-ring.
I went a little overboard and put a bunch of silicone sealant in the hole where the old spigot used to be so there was no dead space, tightened everything up and let it dry for a couple days before i used it. Its been through about 7 or 8 batches now without any leaks.
I went to the other LHBS last night and picked up some more parts, 2 o-rings and a brass nut, to helo try and shore this bad boy up. Gonna try my luck again tonight. I'd really like to brew with it this weekend. I appreciate the input from those of you with this cooler. I expect it to work great once the leaking stops.