I just put an Arctic Freezer 7 (from stock HSF) and reapplied Arctic Silver 5 on my non-oc'd E6400. I haven't reached the 200 hours burn in time (maybe 150 or so now) for the Silver yet...but I haven't registered any temperatures changes in my CPU or Core temps. Before on stock HSF, I was getting high 30's to low 40's Idle CPU temps (non-core) and high 40's to low 50's core temps. Add about 10-12C on each for load temps.
I'm still getting the same temps...
Now I do have a lot of stuff in my case and the case design isn't the greatest. Especially for air intake in the front as the HD cage sits behind the front intake fan (see pic below). The northbride passive heatsink is one flaw of the Asus P5N-E SLI board. It features no fan. I've made my own that does a good job. The chipset runs about 50C (surface on the heatsink) without a fan and about 5-8C cooler when using 2 40mm fans (homemade!) attach on top of the heatsink.
Specs
Intel E6400
Asus P5N-E SLI board 650i Nvidia chipset
8800 GTS 640mb
X-FI Fatality
USB expansion PCI card
DVD-ROM
DVD-RW
2 x 250gb Maxtor's (run about 38-40C on surface)
3.5" Memory card reader
600W Xclio Greatpower PSU
Cooling
Front 80mm Intake
Side Window 120mm Intake
Rear 120mm Exhaust
Top 800mm Exhaust
2 x 40mm Chipset fans
Arctic Freezer 7
Arctic Silver 5
PSU 140mm exhaust fan (on the bottom of PSU directly above the CPU)
(Image removed from quote.)
A couple things.. I don't know if you're an amateur or what, so forgive me for asking some stupid questions. First of all, are your case fans pointing in the proper directions(in through the front, out through the back)? As I'm sure you probably know (if they are configured correctly) that this is in issue for many builders who don't think about this when building their system. Again, don't take offense, just asking.. I'm sure they are arranged correctly.

Secondly, as with many cases, the configuration of the exhaust fan mountings are rather illogical. But, due to design limitations, this is all most of us have to work with. Hence, having your front intake fan down low, and the rear exhaust fan higher whilst airflow being blocked (for the most part) by your video card as well as any of the cables that may be in the way. This is where case modding comes in. I'm at work and don't have the time to look or take pictures of my system to show you. For that, I'm sorry. But I'll explain in a nutshell as it's a pretty simple concept.
I no longer use a 3.5" drive so I don't need those bays. Most cases come with 2 bays for a 3.5" drive incase you want to install a zipdrive or front panel card reader or whatever as well as your standard 3.5" floppy drive. Yeah, so I don't use those bays.. I bought two high performance Zalman 3" fans and set them side by side. They actually provide excellent air flow in addition to my 2 120mm case fans.
I had the same issues as you. I installed an Arctic Cooler for my processor along with Arctic Silver and didn't notice much of a difference while idle or under load. I did some research, asked some questions, and found out how important good airflow really was and how the little things can affect it. I have almost all my cables tucked up behind my motherboard. I'm not sure if you'll have room for that or not. I run a pretty lean system and don't have a need for 2 CD\DVD roms or Two hard drives as I use an external if I need extra storage or whatever.
I really strive to have minimal amount of clutter inside the system. Just about every possible is out of the way and is as open as possible. I realize you may not be able to do this as it looks like you're packed in pretty tight.
Oh! One other trick that helped that I didn't really think was important was this: On most cases, you'll have the grilled/perforated metal where your casefan/fans are supposed to be mounted. I read in a few forums that this metal actually restricts airflow and you'd get up to 40% better airflow if you remove that metal and use aftermarket fan grill covers. So, I cut out the perforated metal, cleaned out the case (be sure to clean out/vacuum out the case when you're done!! Any stray bits or shavings or metal getting on your motherboard or other components and kiss them goodbye!), and replaced them with the after market grill fan covers and I saw a pretty big drop in case ambient temps!
So, yeah.... You can try some of this stuff. May help, may not. But I think at least a little bit of your problem lies in how your fans are position inside that case (airflow being partially or mostly blocked by your video card) as well as how your cables are positioned. I use to be a big fan of molded IDE cables, but they seem rather bulky compared to a high end flat 80 pin IDE cable. The flat cables can be easily tucked behind your motherboard. Plus, molded cables are more expensive as well.
One other thing I noticed: I can't tell by the picture too well, but it looks like you have 4 sticks of memory in that machine, yes? I assume you're using dual channel DDR2, yes? Your memory is configured wrong inside your case unless they've made a major change to how memory should be positioned (which I don't think they have). In order to use dual channel efficiently, you should have one matched pair on one channel, and the other matched pair on the other channel. In your case, have two different brands of memory paired up on one channel and 2 different brands paired up on the other. This can cause problems. I would suggest you put your Crucial Ballistix (looks like Crucial Ballistix by the color but if I'm wrong tell me) in memory slots 1 and 3, and what ever other brand the other stuff is (looks like OCZ but again I may be wrong) on 2 and 4. This way, you'll have a matched pair on one channel and a match pair on the other.

Again, sorry if any of the info I told you is redundant and I didn't mean to offend. <S>