Wild temp & Problems

My pc was working fine last night when i turned it off, but this morning it randomly rebooted itself but it did restart & seemed ok so i uninstalled PC Mark 05 (who`s splash screen freezes & doesnt initiate) i had also disabled some start up programs using msconfig then i restarted my pc. This is where the problems started because it kept rebooting in a continuous loop, i tried `last known good config`but still rebooting. After a few problems i managed to get into the bios and reverted my overclock to normal and enabled speedstep but it was still rebooting and when i looked in hardware monitor the cpu temp was 128`c which is clearly wrong because i would have felt the heat & my TRU 120 pipes would have been red hot but they were cool and the system temp was 27`c & all other temps were normal.
I recently (2 months ago) changed my PSU from OCZ 500w stealthstream to a CM 650w extremepower but had no probs with it apart from noisy fan which i changed and connected to my fan controller.
The rest of my system :-
Intel E8400 co (was clocked @ 4GHZ)
Biostar TPower i45 M/B
OCZ Reaper 1155 mhz 4gb
Seagate 500gb HDD
6x120mm fans set up to 2 controllers
Gfx Card 4870 1mb

Please help, any and all suggestions will be appreciated

The heat sink is a bolt on type with backing plate and its still solid, the temp is clearly reading wrong.

Anyway i pulled the battery out (cant get to cmos jumper without removing gfx crd) and refitted it restarted and i set the whole thing to default settings (bang goes my 4GB overclock) and it seems to be working ok now so i wont be holding my breath because clearly something was wrong. I actually had my multiplier set at 8.5 instead of 9 so the extra fsb & voltage may have contributed to the problem, thats assuming that it was my overclock that was responsible, so when i reset it i should start at 9 and maybe go for something a wee bit smaller like maybe 3.8/7 & be satisfied with that or go for water cooling or a fridge unit.

The other thing is : if my board thinks my cpu is overheating its gonna keep shutting down, so what can possibly cause my cpu to give wrong temps in my BIOS when in actual fact cpu temp is normal ?

What could possibly do that ?

No its not a virus, i dont surf porn sites thats the easiest way i know to get malware.

I am still having problems with random rebooting; i disabled auto reboot on system failure and a message came up telling me that a file called something like "boot config" in windows system 32 folder is missing.

Is there any way to fix this missing file without doing a reinstall of windows xp ?

Whats the best way to reinstall this file using my system disc ?

Would the system restore utility fix this problem do you think ?

I knew it was a software & not hardware problem because my system always gets to the desktop before it reboots.

Also i have a Seagate 500 GB hard drive that is affected by the forceware problems that some of their HDD have been having and i will be fixing that as soon as ive saved some of my stuff.