I was thinking it might be sensors reporting wrong, but the hard drive being so warm, throws that idea out the door. He's not using one of those insane graphics card that puts off lots of heat, and his case appears to be well ventilated. I can't see why things besides his CPU are running that warm.
For all intents and purposes, his setup is very identical to my parents computer. Except it's in an Antec Sonata (which has much less ventilation) and only one rear exhaust fan. They also have a 3870 tossed in there, but using a stock AMD heatsink. Temperatures in their case are still much lower, even with that 3870 squeezed in there.
So... considering it is an old hard drive, which could normally run warmer, that means it's just back to the CPU now. Now the question is, why is it running so warm? It's a 95 watt CPU, nothing too extreme, on stock settings and the stock cooler.
Let's start from the beginning. The CPU is correctly installed and seated? What products are you using to remove the thermal paste with? When you mount the heatsink (which should be clean of dust and debris beforehand), is the heatsink's contact base completely clean? Are you mounting the heatsink on a flat surface? What I mean by that, the case is on it's side, the heatsinking is orientated properly and the heatsink fit's down squarely and snug onto the socket. Are you only using a rice-sized dab of thermal paste? What kind of thermal paste are you using?
This isn't to be taken the wrong way, I just figured maybe starting back from the begining and seeing what process you did, maybe we can figure that "aahhh hah!" moment. Is the heatspreader on the CPU perfectly flat and the contact base on the heatsink perfectly flat? You can check with a razor edge. It doesn't have to be perfectly machined (that's what the thermal paste is for), but if you check the flatness by placing a razor edge on angles and across the surface, it should be flat without hills or valleys.
If we're good to go on the hardware, then it must be something in the installation process that isn't quite working for us.
Oh, and you don't have to tear down your rig for this, just think back to the install and try to give use your best answers in detail. Hopefully one of us on the ball and can spot something or even suggest something else to get you working correctly.
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