For a processor like your 1.3Ghz T.Bird, which even in non overclocked mode produces a lot of heat (approx 65W) you really need an efficient HSF.
Two good models are Swiftech's MC370 and the even better
Swiftech MC462. The only negative points about these,
particularly with the MC462 is that they are very noisy.
Also you would need to check that there was enough free space around the processor socket on your A7M266 if you were to consider replacing your Super Orb with either of these two.
Another excellent HSF which will fit an A7M266 (I have one on mine ) is the Silverado by Noisecontrol (a German company), this is also very quiet as well as good at cooling
As regards thermal compound I would recommend Arctic Silver II (about $10 for a 3g tube which is enough for several applications) its rated highly by many people.
To apply any thermal compound you put a small amount on the processor core (the small rectangle in centre of chip that has AMD Athlon written on it)
and then spread it out to form a thin layer using something like the edge of a credit card (cleaned first with Isopropyl-Alcohol )
See Arctic Silver's web site for detailed instructions