The difference between (true) khushoo' engendered by faith and the hypocritical khushoo' is that the former takes place in the heart to Allaah سبحانه و تعالى and is conduced by veneration, magnification, sobriety, dignity, and shyness. The heart breaks for Allaah سبحانه و تعالى, combining dread, bashfulness, love, and shyness with the perception of Allaah's blessings and one's own transgressions. This necessarily engenders khushoo' in the heart which is then followed by khushoo' on the limbs.
Hypocritical khushoo', on the other hand, appears on the limbs; it is a mere pretence, he person affecting something that is not there since the heart is void of khushoo'. One of the Companions would say, 'I take refuge with Allaah from hypocritial khushoo'.' When asked what it was, he replied, 'That you see the body humble and submissive while the heart is not.' 
The one who has khushoo' for the sake of Allaah سبحانه و تعالى is a servant, in the breast of whom the flames of desires have abated and their smoke has dissipated, replacing in ther stead radiance. The blaze of the greatness (of Allaah سبحانه و تعالى) has been ignited, and the lusts of the soul have died in the face of fear and sobriety which have, in turn, stilled the limbs and quietened the heart.
The heart is content and at peace with Allaah سبحانه و تعالى, and it remembers Him; engulfed in the effusion of tranquility descending from its Lord, it becomes meek and humble (mukhbit). The heart which is meek is the heart which is at peace and rest for the land which is mukhbit is land which is low-lying to which water flows and settles. The same applies to the heart: when it is mukhbit, i.e. it has achieved khushoo', it becomes like this piece of low-lying land to which water flows and settles.
The sign of such a heart is that (its owner) will prostrate before Allaah سبحانه و تعالى out of magnification and abject humility, broken before Him, never (desiring) to raise his head till the day he meets Him. This is the khushoo' engendered by faith.
The arrogant heart, on the other hand, heaves and swells in its arrogance like a fast flowing river. It is like an elevated portion of the land at which water never settles. This is hypocritical khushoo': the person feigns quietude and affects stillness of limb by way of ostentation. In reality, his soul is raging with lusts and desires; outwardly he displays khushoo', but inwardly the valley serpant and jungle lion lurk between his shoulders, waiting to pounce on the its prey." 
 Imaam Ahmad رحمه الله, az-Zuhd, p142 and Ibn al-Mubaarak رحمه الله, az-Zuhd #143 on the authority of Sayyiduna Abud-Dardaa' (may Allaah be pleased with him)
 ar-Rooh, pp 346-347