For padding, go back to WalMart and buy some cheap throw covers (the foam like kind) and/or some cheap bath towels.

Pipe insulation could work too, but I'm not sure if Wallyworld sells that.

Edit: if your Walmart has a sewing section, look for the foam sheets, they come in 1", 1.5", 2", etc thicknesses (my daughter is well versed in sewing), you can cut them down to size and would be perfect.