If you are going to reapply the termal paste then take a look at this
post. It has links to how Arctic recommends you apply thermal paste based on the type of cpu.
As for which direction to point the HSF, I would try it both ways to see which gives you better results. Do you have the PSU mounted up top? If so then this could help pull warm air away from the HSF.
Also the side fan on that case should provide enough cool air for teh HSF to not worry too much about relying on the front intake for cool air.