Your link doesn't work...it's not a typical jpeg link or even a web link.
I've made chemo caps and I just make a normal hat, but with a few less stitches. Like instead of 80 I cast on 72. I always use a soft yarn with no wool and it's usually worsted weight. The last ones I made with Berroco Comfort.
Are you sure you're getting 10 stitches to the inch?? What size needles are you using? Looks like that's DK weight.. http://www.ravelry.com/yarns/library...baby-bamboo-dk
which is normally about 22 stitches over 4 inches so nowhere near the 40 you're getting.