Hi Peanut, just came across this now, my name in a thread! The bios wasn't the problem although it didn't hurt to update it, it was the fact that the processor was an engineering sample, after a search on the web i found that these are processors which were never meant for retail, were used for testing (alpha) and have most likely been stolen by an insider at a warehouse/depot. I bought it from ebay a while back and consider myself lucky with the one I've gotten after having reading about others experiences. If you look on ebay there are loads of them still being sold "as is", it was really infuriating that i couldn't in some way warn ebayers of the dodginess.
Have you given the overclocking another try?
Try this: lock the pci/ agp bus at 33mhz/100mhz,
change the cpu frequency from 200 to 217 and increase the cpu voltage from 1.5 to 1.55, that'll give you a 2.6 ghz processor. You may have to change memory settings to make it stable...