I am a first time builder and I know this is a dumb question but with thermal paste applied on top of the cpu, is the hsf supposed to sit directly on the cpu?
yes. you must understand that the thermal paste is to enhance the contact point between the processor and the heatsink. you see, if the processor and the heatsink have wholes or inconsistencies on the surface then the contact wouldn't be complete thus resulting in less optimal transfer of heat. here's there the thermal paste comes in. so now that you have thermal paste in between them, it will take up the empty spaces (should there be any) and be the contact point between both.
... and be careful when applying paste. The most common fault is to use too much. Ideally it should only fill the gaps, not add any distance between the CPU and the heatsink. Another fault sometimes encountered is when there's already some thermal compound pre-attached to the heatsink, typically on "boxed" heatsinks that come with the CPU. Applying extra paste to those is a big no-no. /Olle
And for those who are using Arctic Silver and it's relatives products, you can refer here for a proper guide to applying their thermal pastes according to processor type. Make sure the base of the hsf and the proc's IHS is properly cleaned using isoprpyl alcohol http://www.arcticsilver.com/instructions.htm
