Watery steam in Krups XP 5000

My wife and I just purchased a Krups XP 5000. It is similar to the 4000, but it has a big knob at the top instead of the front.
I used to have a small Krups Gusto, which produced beautiful dry steam, and it would let me make very good froth. We had to retire the Gusto after it got infested with cockroaches (!).
The goddamn XP 5000 produces *very watery* steam, and my milk ends up all watered down, with horrible foam! You can hear the water pump go thump-thump-thump while the machine is putting out steam. The old Gusto didn't add any water to the tank while it was steaming, so you could eventually get dry steam from it.
Does anyone else have the same problem? Should I return the machine? :(
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