I love this stuff. I use it all the time for school projects, USB covers and custom enclosures for my projects. I use Jaycar Electronics as a source for this stuff and it is ~$8 for 500 grams. It can be drilled, painted and re-moulded time and time again. I will show you what i think is the easiest way to make stuff with polymorph. PS i am not assosiated with jaycar in any way.
Step 1: Start
This is the hardest part of all. You can use either a wall or a high-walled metal tray. Tray's work well because they keep the plastic warm while making.
Place ~ 5 pellets against the wall and set a hairdryer to it's lowest speed and highest heat. heat the plastic until it goes clear. I haven't used hot water because this works so well for me.
Step 2: More!!!
You should end up with something like the picture below. a clear glob.
Next, push more pellets into the mass like in the second picture.
Then, heat and repeat!