Dualstrusion printing has its own set of unique issues. A number of the issues you might see relate to your slicer: some slicers are much better than others at handling dualstrusion. As of this writing, the “gold standard” for dualstrusion slicing is MakerBot’s slicer found in their MakerWare and Desktop applications. Both are presently free and may be obtained at makerbot.com.
If your dualstrusion prints exhibit poor alignment between the two colors or plastics being printed, you likely need to calibrate the nozzle spacing (i.e., the “toolhead offsets”). See Section 4.2 for detailed directions on this calibration process.
Note that the calibration process described in Section 4.2 is only accurate to about 0.1 mm. You are effectively picking the adjustments with a 0.1 mm granularity. You can, if you want, do better by printing your own calibration prints and measuring the errors with calipers and then entering the measured toolhead offsets manually using the “Toolhead Offsets” menu as described in Section 3.7.11.
In general, the plastic from each extruder has a tendency to get dragged all over the print, causing color bleed. This is difficult to avoid. Using “purge walls” helps mitigate the problem somewhat. Try to use a slicer which will automatically generate purge walls. If your slicer cannot, then consider adding them to your print before slicing.
If you feel that the firmware is contributing to the plastic oozing too much from the idle extruder, then check to see if “Extruder Hold” is enabled. You can check it via the front panel as per Section 184.108.40.206.