If you look at CPU-Z, you will see that he has a desktop XP 2500+, most likely locked. If it were a mobile chip, CPU-Z would recognize it as such, and it would have a different logo picture at the top. The fact that it is also at 1.75v to achieve that speed is also a dead giveaway. The mobile 2600+ I just sold could do at least 2.5 GHz with that voltage on air. If it were unlocked, I imagine he would have squeezed at least 100 more MHz out of it by raising the multiplier.
He doesn't have what kind of Corsair PC3200 he has listed, but my guess is that it is ValueSelect. If this is the case, his overclock is limited by RAM more than it is by temperatures. I had some VS PC3200 that would fail memtest86 at 201 MHz, no kidding. The only thing to do is replace that if you want to get a respectable FSB and higher overclock.
As far as temperatures, they are a bit high, but nothing terrible. I'm going to assume that he is also using the stock cooler, or at least a very poor one. To give you an idea, the XP-M I mentioned earlier almost never broke 44º C under load. This was with SI-97 and a 92mm Delta, though. Still, I can't see him getting much higher than the 55-60º range even when running Prime, so temperature is not a huge problem, although obviously you want it as low as possible.
My advice would be to upgrade the RAM first, -OR- get a mobile chip (2600 pref.), then worry about cooling. There's no point in running 30-something degrees idle if it does nothing to improve your overclock, which I believe is RAM-limited. Buying a mobile chip would get around the RAM problem, since you would be able to change multiplier. I'm not sure about that Asus board, but I think it lets you go up to 12.5 multiplier, which would put you up to 2.5 GHz, which is a much more respectable overclock.