The temp sensor is generally attached to the heat sink near where the heat sink contacts the CPU. If the heat sink has a poor thermal connection to the CPU, the CPU can be running a lot hotter than the heat sink sensor is reading. The fact that the system slows down when the allarm goes of seems to indicate that the CPU is slowing down to protect itself.
You might want to go to Radio shack and purchase some heat sink grease, it is a white compond that comes in squeeze tube and olny costs a couple of bucks. Remove the heat sink from the CPU, (be careful here, do not force the parts to seperate, you might be better served checking with the manufaturer of the MB for details.) Clean both surfaces, then apply a dab of the new compound (it does not take a lot to work!) and replace the heat sink.
This one might be reaching…but, does the system use any kind of HD monitoring system such as S.M.A.R.T. The sound might indicate a failing HD.