You don't have good thermal contact between the CPU surface & the heatsink base if it's that hot & the fans are turning.
Check whether something is preventing the sink from being pulled tight against the CPU face. Get some Artic Silver-III thermal paste between them. They won't last very long running that hot!
How are you getting the temp readout?
Extremely hot processor
Aside from those good suggestions above, it might as well be that the temperature readouts are wrong. I once had a system temperature of way above 100 degrees- Celsius. It went higher and higher... I was already becoming afraid of the China syndrome 

BP6, RU BIOS, XP SP3, ACPI, 2x366@523(1,95V), Pentalpha HS + 1x 12cm fan @5V, 768MB, Powercolor Geforce 3, RTL8139D NIC, Terratec EWS64L, Samsung M40 80GB (2,5''), LiteOn CDRW