I've been trying to set my last quad and I found it impossible so far. I have the same board (KK2.1) and firmware from Steveis in two other quads and I just can't find how to tune this one. The vibration dampening pad works well in the other multirotors too but I tried to improve it for this one anyway: no way to make it even hover!
When I got the frame I detected that the arms' tips could rotate and bend too easily... I think it is the source of the problem. Check my other video testing the arms' flexibility at http://youtu.be/vApj5fouCl0
Looking forward to hear some (other?) explanations and comments to solve/improve the problem!