hmm, thats the worst tihng u did, spreading it all over CPU, as thermal pastes are applied in such manner, that only 10% of the CPU die gets covered (no big bump as well). this then automatically adjusts itself covering 60% area in 2-3 days of operation. this finalises into a very very thin layer (thinner than hairline) that effectively transmits heat from the CPU die to the heat sink base.
as no two surfaces of the DIE and heatsink are perfectly smooth to come in 100% contact with each othre, as if they still are smoth, still there left micron valleys not visible to naked eye. so these valleys are to be filled which require even less than hairline thickness of the thermal material.
once again pulloff the heat sink, clean both CPU die and Heatsink with isopropyl alcohol, then re-apply a very minute quantity and see if cools down your system,
have you over clocked ur system?
Intel Core2Quad 2.66Ghz 12MB L2-Cache
4096MB DDR Kingston Hyper-X
XFX 9600GT AlphaDog
Seagate 2 X 320GB SATA2
LG L246WH Flatron 24"