Mine fits in it's "holster" like a glove... However I've never extended it (although I have removed it on numerous trips to the dragstrip). Maybe the jack isn't "compressed" all of the way causing it to be ill-fitting?
I take my jack out of my car every time I go to the drag strip. You say that it is loose where it sits? Put the jack in place in the trunk where it is supposed to be seated. Adjust the jack by turning the adjuster knob clockwise, like you are jacking up the car. It should expand and tighten itself to the trunk holding area. I had a problem with the jack not seating properly. This is what I did. Try it out. Good luck.
Yes, turn the knob all the way until it is seated tight. As I recall, this jack has to be run all the way out to fit properly in the holder. Anyhow, I seldom need it: it's there for emergency breakdowns and I use the floor jack the rest of the time.