Processor Overheating?

First off, the thermal compound is necessary because it provides optimal heat transfer between the "rough" heatsink surface and the processor's die.
Without it, air gets "trapped" between both surfaces, and the HS efficiency becomes severely compromised.

And second, Radeon X800 cards can run hot. Especially their RAM. Try aiming a case fan to it, and see if that reduces the freezings and lock-ups.

Hope this helped

hmm yes it has helped. However I attempted to put a fan facing my computer but then it makes the monitor shake like crazy.

and for the compound..is it expensive and easily found at a local best buy or something?