Rick,
The problem is not the dispenser valve. It only controls the amount of cold water that enters into the tank. There is no valve to control the hot water as it exits the tank. You only get hot water out of the unit when more cold water enters the tank to push the hot water out. So it sounds like the thermostat is either set too high or it is defective causing the water in the tank to overheat and boil out the open outlet pipe. I do not know if Insinkerator services this part or a replacement tank will be necessary, but a call to them as Roy suggested should give you the answer.
Gerald