Well just got down to 32 degrees with the balance point set at 30 and both the HP and the furnace kicked on

170 set to 7 2 heat/1 cool heat pump - ok
200 set to 1 fossile fuel is back up - ok
310 increase your deadband to 5 F (is not an option)
340 set to 2 outdoor temp sens used for control - ok
350 set to 40 F balance point (set to 30 degrees)
360 set to 40 F lock out (is not an option for fossil fuel this is for electric)
680 set to 1 less aggressive temp control. This is where you're getting stuck with the HP and furnace running at the same time. The furnace will only come on if room temp can not be achived when the OD temp is above 40 F. (tried it didn't work - set it back to 2)

Guess I need to find someone to install the fossil fuel kit. Thanks for all the help.