Just tighten the screws until they're quite snug. As you mentioned, you don't want to overtighten them to the point of causing damage. As long as the heatsink doesn't move if you tug on it, it should be good.
I got an i7-930 CPU and Thermalright Ultra 120 Rev.C heatsink. How should I know if mounting screws are tight enough? I'm just bit afraid to break the CPU I try to tighten the screws too much.
If i post some pictures, can you guys suggest if its loose or tight?
Intel's technical documentation says that there should be no more than 60 pounds of static force (266 N) on the IHS surface. If you have taken a good physics course or preferably engineering statics and are really handy with a micrometer, torque screwdriver, and a pencil and paper, you can figure out exactly how tightly to torque the screws to get that amount of force.
If you're like most of us and aren't going to set up a force diagram of your CPU heatsink arrangement, just tighten the screws with a screwdriver until they are moderately snug and the heatsink doesn't wiggle when you gently tug on it. Remember to tighten the screws across the socket as if you were tightening lug nuts on a car wheel so you get an even tightening of the heatsink on the socket.
I think it's at least as important to tighten all screws uniformly. Modern CPUs have heat spreaders on top. To take advantage of the heat spreader the HS surface must be in uniform contact with the surface of the spreader. Tightening one screw more than the rest will offset the pressure center and alter the cooling characteristics of the HS. The previous suggestion to tighten the screws in diagonal sequence is a good one but extreme care should be taken to apply equal torque. Small torque screwdrivers aren't expensive. Try Harbor Freight.