First power up. Burn smell. Red CPU LED. Did I burn my CPU?

LONG STORY SHORT :
I swapped out my old mobo and CPU for an i7-2700K and a Sabertooth P67.
When I first powered it up, within a second or two, I got a slight crackling noise and the smell of something burning. I pulled off the plug and while doing it, I saw the red CPU LED on. Turned the power on again after a few minutes, and no smell, no noise. Red CPU led was on.

I checked wiring, checked for any burns, reseated the processor, replaced the aftermarket cooler with the stock one.
Turned up the power again. Motherboard power LED and the red CPU LED next to the processor was ON. Video card fan was working. Case fans were working. CPU fan was working. Bay fan controller powered up. CD-Drives powered up fine. HARD DISK fan did NOT power up < I'm guessing this is because it did not go past the 'CPU stage' when POSTing.

Details are in the below post. Please take a minute to read and help out guys.
My specs are :
Intel i7-2700K
ASUS Sabertooth P67
Kingston HyperX 4GB x 2 1600Mhz
EVGA GTX 560 Ti
Thermaltake TR2 RX 750W PSU
Cooler Master v6GT Cooler. Swapped it out for the stock cooler until I figure out the problem.

Hey guys,

I did a new build using a second hand motherboard and processor. Intel i7-2700K + ASUS Sabertooth P67.
Except the processor was brand new in box, with all the seals intact.
The motherboard was brought from a seller who had used it for about 6 months. I checked to see all the pins and sockets. They were fine. And the board was clean and fairly new.

I started up my PC for the first time and within a split second, I heard a slight crackling noise(it may have been my imagination) and got the smell of something burning. It was the smell you normally get from malfunctioning electric appliances. I quickly pulled the power off. Before pulling the plug off, I remember the red LED next to the processor being ON, indicating something wrong with the processor.
I rechecked all the wiring and powered it on again. No noise and no smell. Power was distributed to the motherboard well. Motherboard power LED and the RED LED next to the processor was ON. Video card fan was working. Case fans were working. CPU fan was working. Bay fan controller powered up. CD-Drives powered up fine. HARD DISKS fans did NOT power up < I'm guessing this is because it did not go past the 'CPU stage' when POSTing.

It was clear the problem was at the CPU.
What I need help figuring out is:
1. Did something burn my CPU? If so, is it gonna burn any new CPU I put in it? How can I test it?
2. Did I get the plastic-burning smell because I accidently applied a little too much thermal grease and this was the first time I was powering on the new build? Even if it was the thermal paste heating up and giving off the smell, will it happen as soon as one second after the first power on?
3. Maybe the old user of the motherboard had bad voltage settings for the CPU when he tried overclocking. And these settings may have remained in the BIOS or CMOS and caused the new CPU to burn. Is it possible for these OC settings to remain after the motherboard had been fully unplugged for a week or so?

IF by any chance it is not the CPU that was malfunctioning, is there anything else that could be stopping the CPU to power up & function?

Things I have tried:
-Clear CMOS by moving the jumper.
-Replace the after market cooler with the stock one. Online forums said there is a chance of the aftermarket backplate shorting the motherboard. But will it burn any components?

I'm lost here guys, please help out with any tips and suggestions.

NOTE: The pc was a working machine. I only switched out my AMD 1100T processor and Sabertooth 990fx mobo. The only extra difference is that I used a BitFenix Alchemy extension for the ATX 24-pin power cable.

Do you think bad voltage alterations can burn a CPU within a second or two?
And the extension cable was the ATX 24-pin. It was plugged in correctly as far as I know. By "pinned", do you mean check its pins?
And I removed the extension cable after the first power up. The second power up was with the regular cable.

I just bought a I5 2400 and a sabertooth p67. Never noticed any burning smell, but my CPU led is red, and monitor in standby. Also everything powers up for a second only to shut of, then go back up again. Then all fans and hd seem to be working, but the cpu led is red and nothing happens on screen. Any tips for me? Is my CPU broken? I can't get the stock fan of the motherboard now, annoying as hell