Kubota Oh
fiberglass insulation.

Ron
How about plastering the gaps around the unit? that's the best way to go about it, here are some tips to do it...

OSTIAN
if you can get wooden strip of right size, and slip it gently with a help of an hammer, in the gap between the edges of the unit and the wall. And, then, to fill the gap with foam , will do a fine job. Or get a carpenter do the job for you all the best .

Jeffrey M
Old towels work well around mine.

formula460
If you use fiberglass insulation & it Crushes down , you are destroying its ability to insulate. There are sound proofers, that you could use. But i would go get a Scrap Drywall piece, Cut to size & fill it all in. Then you can get some inexpensive pine trim, & cut it like a Picture frame, Use a few finish nails, paint it up, & done. Or Call a carpenter $200 A cpl hrs & if hes good, it will look nice.

James Bond
Ok...after reading over the answers already given, I'll give my advice..... Correct, fiberglass insulation will crush and will be useless. You don't want to go pounding pieces of scrap wood along side of the unit because you could damage it. I also believe that drywall isn't the best application because it will crumble as it receives moisture from not only the unit, but the outside air. How about weather stripping? Is it too large of a void to fill with just weatherstripping? Otherwise, go to your nearest hardware store and get a small sheet of foam board used on houses...it usually goes on under siding in northern areas and has an R value. This stuff is really rigid and should hold up quite well. I believe you can get it in sizes up to 1" thick and it's incredibly dense so it will also do a great job to block out the sound. All you need is a utility knife to cut it and then put it in place by hand. You can also get rope caulking which is caulk that comes in a roll. Use this to seal any small imperfections along the sides. It may not look the best, but then you could hide it like another person suggested...with cheap pine moulding and some finishing nails.