first of all, what core do you have? winchester? that is important. the winchesters are much better overclockers than the other cores. they are cooler and have lower voltages. with these 90nm cores you can set the vcore up to 1.55v. if you have a 130nm chip like the newcassle, you can go up to 1.65v. ok, so, you couldnt post higher than 266 fsb? so if that is as high as it goes, set the voltage as high as zebo recommended. then set the multiplyer to 10, and work your way up to 266 fsb. when your chip has an error within the first 5 minutes if prime, reduce it by 5%. set it to that value, and run prime for 12-14 hrs. when you do this, make sure your memory is on the lowest setting. you can see this in cpu-z. if your memory goes over the limit, it will cause prime to fail even if your cpu can be overclocked way more than that. remember, cpu speed is king.
5. dont let your memory hold you back. set it on the lowest setting util you find your max stable cpu overclock. then leave the cpu alone, and increase the memory speed as close as you can to the max. if you cant get a high memory speed, like below 200mhz, just tighten up the latency a lot. this will give you better performance than those extra few mhz's.
6. there is no question that AMD is superior to intel in performance. in order to get an intel chip that performs as well as yours, you would have to pay WAY more money. also, the overclocking capabilies of AMD are far greater than intel. you made a good choice by buying that chip.