the humid garage air hits the cold metal, and condenses just like a glass with ice sweats. Adding insulation may not stop the unit from slowly sweating because the moisture will still get to it thru open cell or fiberglass insulation (if you choose to use fiberglass or open cell - which is usually the least costly). Also adding insulation right to a heater, if it has burners in it, can be a fire hazard if the wrong kind of insulation is used. To stop sweating you need one of these: closed cell insulation, insulation and a vapor barrier, or put it in conditioned space where the humidity is lower. Me, I'd build an enclosure and find a way to condition that space. Keep in mind that if it is also a gas furnace, there will be an issue with air supply to the burners. Putting a fan on it may make the sweating worse if it simply makes more moist air flow across it.