Other possible causes of bad localization:
- Magnetic distortions from nearby metal objects (chair, shielded room) or electromagnetic interference (computers). Ideally, you want to perform this in the middle of an open space on a plastic or wooden chair.
- Movement of the receiver attached to the head. This is tricky, but you have to make sure it doesn't move at all with respect to the head. To be safe, ask the person not to move their head, you can move around them to digitize all sides.
The hardware is fragile. Dropping the stylus, receiver or emitter once can break them in a way that gives bad localization but seems to work otherwise. We've had to replace our stylus twice and receiver once in the past few years. Reading the error codes from the built in tests (BIT), e.g. with Polhemus' PiMgr software, is a quick way to verify the hardware. Polhemus support can help you with this, and give you the password to download and install PiMgr.
P.S.: I've added some of the info in my answers here to the tutorial troubleshooting section.