Misreporting Temperatures?

[Shpongle]

My system:
4200+ x2 @ 2.4[Manchester]
2GB Corsair XMS DDR
XFX 8800 GT @ 640/900

CPU Heatsink- Vigor Gaming Monsoon Cooling( TEC, Peltier)
3 120mm fans(1 out back, 2 in front)
1 70 mm (Side case, right in front of CPU,taking air right out the side)

So theres my system info... The Monsoon temperature reporter says I'm at 43C IDLE!!!!!, and anywhere from 66-70C under load.. Scary,I know. The thing is, everything in my case is cool to the touch in any given situation, all fans blow ice cold air out, bring nice cold air in... and everything runs fine. This cooling solution( Monsoon for CPU, fans aside..) is in many cases better than some water cooling set ups.

During the Minnesota winter this wasn't an issue, because it's hard enough for myself to keep warm,let alone my computer.. but now that the snow has thawed(finally!), the CPU temp according to the Monsoon deck has been reaching 70C, at which point it beeps and beeps and beeps, driving me to wits end.

Was wondering if anyone could narrow down whether my CPU sink is going bad, my processor is really running this hot, or if I'm getting a bad temperature read?
I've re-applied thermal paste, updated my bios to the latest edition, reverted my CPU to original clock, and have reseated the heatsink.
For reference, since it's kind of hard to explain what my set up looks like...

http://www.pcper.com/images/reviews/273/1-Monsoon-II.jpg

edit: CoreTemp is verifying the temp readout, so my question now is... why is my CPU so bleeding hot,even with all this cooling?

 

[BillParrish]

Since coretemp verified your hot runnng cpu and you checked the mounting, I would have to speculate the Monsoon is broken. I would be all over their tech support/forum asking what the hell was going on and how could I test the components of the Monsoon.