I7 Temperature - Incorrect HeatSink Installation?

Recently built an Intel i7 system with a Mugen 2 HS inside an Antec 300 case. The Gigabyte software says my CPU temp runs between 37 and 39 degrees with no overclocking. Am I correct in my assumption that something is wrong at those temps? I have the fan on the side of the HS instead of underneath it because I didn't want to block the expansion slots - could that be the issue?

Those temps are fine. Load it up with a burn tool and check the temps then. Mine runs about 38-41 but mine is in the garage and the abient air temp is whatever it is outside...I have a refrigerated ac ducted and blowing cooled air towards the front intake on my case, teh air coming out of the duct is 64 degrees but mixes with the hotter air before going into the front fan, also the 23mm side fan pulls the 100 degree air into the case and mixes with the cool air coming in from the front, the temp inside the case stays about 70-75 when it is 105 inside the garage. Only way I could keep it cool and where it wouldn't start stepping the cpu down because of heat. Now this winter it will be super cooled....15 outside = 15 in the case!! LOL I know, I have a mancave that isn't that good!!

Buy some AS5 and put it on your nb, sb, gfx. This should lower your temps a bit.

70 C? Won't that melt things?

No, that's right around the max temp according to Intel. If you keep the temp under 70C under full load you'll be fine.