i used just a small amount, maybe the size of piece of rice, but i spread it out myself, do you think i should clean it off and just put a dab on again and just sit the heatsink on it and do like you said and let the heatsink spread it?
Some people say one way, some people say the other.
Grain of rice... I use one the size of a small pea, but in the end it's all the same shit.
I let the heatsink spread it out. Some people spread it out with a credit card (or something of the like). As long as you're not slathering it on it's fine; it's basically supposed to be a thin film; no matter how you do it (drop it on like me, spread it like you) the heatsink is STILL going to spread it out when it's clamped down anyway. You probably get a little more of an even spread your way. If I were to take mine off right now there would probably be spots under it where it's dry.
I had some Zalman shit that came with a little brush applicator (like nail polish), used it on my brother's 360, spread it nice and even, and he hasn't had a single problem.
I'd cut out the mesh in the back for starters, though that likely won't make a huge difference. Make sure your heatsinks are clamped down properly (all 4 posts have the xclamp attached to them)
Past that... I don't think you can oil the fans on the 360, iirc they're close ended, not covered with a label (which sucks). If I am wrong; you can check by peeling back the sticker on the center of each fan and seeing if there's a little spindle with a c-clip at the end - lube it up a little bit. I used a drop of motor oil on a fan I had for a different application and that made a world of difference.