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I think that I can reassure you about this. I don't think you have to worry about the insulation - let me explain why.
If you think about what that product is designed for, it's specifically designed NOT to break down or dissolve. It's designed to be a totally inert barrier... so my suspicion is that whatever amount your grandson ate just passed right through his digestive tract, and was in the same condition when it came out in his stool as it was when he swallowed it.
If you'd like to be totally sure, then the best bet is to get the canister or package for the insulation and then call Poison Control (1-800-222-1222). They can look up the product information (or go through the ingredients one-by-one) and reference it with the toxicology data that they have.
However, my suspicion is that your grandson's symptoms are related to what his pediatrician suspected: an infection of some kind. The restlessness, cough, fever, rash, etc. sound more like a run-of-the-mill childhood infection than a toxic ingestion. For the most part, ingestions cause problems abruptly and then just as abruptly go away as the body clears the offending agent - the symptoms don't play out over days like they do with an infection.
The same behavior that led your grandson to eat the insulation is probably what set him up to get sick: the natural tendency of toddlers to put everything in their mouths! My hunch is that he probably got one germ or another into his body that way, and it'll just take a little time for his immune system to work that out.
If his symptoms are getting better, then that's a good sign that his immune system is doing just that - and it suggests that we don't have to do any more than help get him through this illness by keeping him as comfortable as we can. So my opinion is that so long as you think he's getting better, it's safe to just keep an eye on his symptoms. If new things come up, then we should re-evaluate him to be sure that we're not missing something. Otherwise, we can just let him get better on his own.
I hope that this information is helpful to you. If I have answered your original question, please take a moment to rate the quality of my response - your feedback really does matter! And if you have any more questions - now or in the future - please do not hesitate to ask.
Best wishes to you and your family...