re: sandpaper: i checked Checker's (an auto parts store) yesterday, and they had 3M brand up to 1500 grain wet/dry, and a nice kit with assorted sheets, 200-800. but, they are rather pricey at $5 for 4-5 sheets. i'm going to try Ace hardware today, on the forums, people say you can get individual sheets for $.50. also, i'm going to check ben franklin for a model polishing kit.
the bios temp usually measures tjunction max, but still it should not be anywhere near 20c.
One thing you can check is the PSU installation and exhaust. Usually, PSU's will suck air from the case and out the back, but recently there's been a rash of PSU's that blow air into the case. if your xigmatek is typical, it is probably blowing air upwards. if the PSU is also blowing inwards, you'll have an airflow issue.
it could also be a rail tolerance issue. try resetting your bios for stock and seeing the temperatures.
this article is meant for AMD chips, but the software is probably relevant for intel as well.
http://forums.amd.com/forum/messageview.cfm?catid=11&threadid=98342&enterthread=y