hinesguy,
This has been a common way of insulating pumps, but it never works on low temperature systems. This is because it is nearly impossible to establish a vapor barrier with these sheet metal boxes. And if you do, it will be destroyed forever as soon as the first technician removes the box for maintenance. In case you don't know, the vapor barrier is what keeps the high dewpoint air from entering the pump box and causing condensation on the pump surfaces.
A good insulator can take cut some elastomeric foam (Armaflex is a good one) and glue it tightly (no voids) to the pump body. This stuff is closed cell, so it will not absorb water. Make sure that he doesn't cover grease fittings. For good adhesion, the pump will have to be dry. Ideally, you shut the pump down, and allow it to warm up until there is no condensation forming.
Keep in mind that there will still be some cold surfaces, and therefore some condensation. But it will be much less than with the pump box.
---KenRad