There are many Thermal Pastes, some better than others. I have previousl used IC-Diamond and Arctic 5 but now trying out Xilence -x.
There is a good write up at http://www.tomshardware.co.uk/cooling-air-pressure-heatsink,review-32320-8.html
How much paste to apply: I generally apply a medium peas sized amount and allow to spread with the pressure of the mounting screws. If you mess around with the paste you will introduce air bubbles into the compund which is not ideal.
Running PRIME 95 mobo temp stayed constant below 40C. The HD60 Liquid cooler has worked very well so far as well as the Xilence paste..