Take the heatsink off. Dust it and the fan out really good. Apply a new thermal interface compound to the cpu, such as Arctic Silver 5. Make sure you have some available before you rub off the current cpu grease, as any is far better than none. Once you have put one rice sized grain of Arctic Silver 5 on the center of the cpu core, then put the heatsink on. Triple and quadruple check that you have put it on correctly as socket A has a terrible mounting mechanism that can cause problems from overheating to breaking the cpu core.
Check your temperatures again. If your cpu was overheating, then it would crash your system rather than just slow it down.
As for overclocking, with a 2500+ Barton, it is rather easy to get to 3200+ speeds. If you have an older Barton, you can raise your multiplier up to 12.5. 12.5x166(your likely fsb) would equal 2075Mhz. Also, by keeping your stock 11 multiplier, you could raise the fsb to 200, bringing you to 200x11, or 2200Mhz, or Athlon XP 3200+ equivalency.
If your machine crashes overclocking to these settings be sure you have made sure your memory is not the bottleneck. Also up your cpu voltage bit by bit to see if it helps. I would not go over 1.75Volts on the vcore.
Hope this helps.