ALTDEV ALT OVERSHOT BY A B737-800 FLC WITH AN IMPROPERLY SET ALTIMETER DURING A CHANGE IN HOLDING ON THE KORRY 1 STAR INTO LGA; NY.

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DURING ARR ON THE KORRY 1 TO LGA AT NIGHT; IFR; WITH SEVERE TSTMS; WE WERE ISSUED HOLDING AT HOLEY INTXN AND CLRED TO DSND TO AND HOLD AT 17000 FT FROM FL270. WHILE ENTERING THE HOLD AT HOLEY STILL DSNDING AND SLOWING TO HOLDING SPD; ATC ISSUED A NEW HOLD OVER STEFE INTXN DUE TO TSTM APCHING HOLEY. HAD TROUBLE FINDING STEFE SINCE IT IS NOT ON ANY LGA ARRS NOR ON THE NEW YORK AREA CHART THAT WE HAD OUT. ALSO; THE CLRNC WAS UNCLR AS TO WHEN TO GO TO STEFE AND HOLD DUE TO HIGH CTLR WORKLOAD. IT TOOK SOME TIME TO CLARIFY THE LOCATION OF STEFE AND THE PROPER HOLDING PROC ADDING TO THE CONFUSION OF TYPING ALL OF THIS INTO THE FMC. ATC TRIED TO HELP US BY GIVING US ANOTHER HOLD AT THE DQO 053 DEG RADIAL AT 25 DME; BUT THIS ACTUALLY CAUSED MORE WORKLOAD DUE TO REPROGRAMMING THE FMC. WE WERE ALSO CLRED TO EXPEDITE TO 13000 FT. NOTE: THERE IS ONLY SOME 20 AIR MI BTWN HOLEY AND STEFE; SO TIME WAS COMPRESSED. RAW DATA WAS USED. WITH ALL OF THIS HAPPENING; WE MISSED THE IN-RANGE CHKLIST AND OUR ALTIMETERS WERE SET TO 29.92 WHEN THEY SHOULD HAVE BEEN AT 29.54. THIS PUT US 380 FT LOW AT APPROX 12620 FT. ATC CALLED TO CONFIRM OUR ALT AND THE ERROR WAS DISCOVERED. DURING CORRECTION; ACFT OVERSHOOT OF 300 FT OCCURRED BEFORE LEVELING AT 13000 FT. ATC CALLED TO CONFIRM OUR LEVEL; WHICH AT THAT POINT HAD BEEN CORRECTED BACK TO 13000 FT. THE REMAINDER OF FLT WAS UNEVENTFUL. A HIGH WORKLOAD IN DETERIORATING/SEVERE WX CONDITIONS ALONG WITH THE DESIRE TO PROPERLY PROGRAM/EMPLOY THE FMC IN A TIME COMPRESSED PERIOD PRESENTED A DISTR.