Hmm. I haven't ever heard of a CPU overheating because it is faulty, but I am by no means the most experienced guy on here. There are a few things find out first.
1. What make/model is your CPU?
2. Is it overclocked at all? - If it is, try running at stock clocks/voltage.
3. Do you have the stock cooler that came with the CPU?
My first reaction would be to remove the heatsink block from the CPU, clean off the thermal paste, re-apply new paste and then refit the heatsink block making sure it's as tight to the CPU as safely possible. If it is still overheating, try a different cooler. If it's still overheating after that then it may be the CPU after all.
Hope this helps.
Yeah the cooler may have gone bad. Maybe the pump stopped working? I would try a different cooler before trying anything more drastic. See if you can pick up a cheap air cooler just to make sure that it's your water cooler thats' gone bad. But it sounds to me that your 2 year old water cooler has given up the ghost. Good luck.
Turn it on, and feel the pump to see if it's working.
Try and unseat the cooler, clean the processor IHS and the cooler off with isopropyl alcohol and a lint-free cloth/rag/etc., reapply thermal paste, and reseat the cooler. Dying thermal paste could possibly be the issue, if they didn't use high quality thermal paste.