Okay I got some new thermal pads and got the system up and running. It's still running a little hot for my tastes (78-80C) but it's not shutting down anymore so I got XP installed successfully.
KSPhysicist- yeah unfortunately this is the "NEW & IMPROVED!!!*" intel heatsink design.
No springs, just the four plastic push-pins that go through holes in the mobo.
Since there is no spring pressure to take up the slack the tolerances need to be spot-on.....but they're not. The slightly thicker thermal pad apparently is the main contact but definitely not my cup of tea. I want metal-to-metal with the paste just filling in the gaps.
At this point I'm trying to decide whether to take it back off and try to get a better fit or just leave well-enough alone since it's working okay.
For your guys reference I'd avoid the LGA775 package unless you have a better heatsink/fan mounting method than the factory intel version.
Thanks for the help!