lol, if you really were at 120*c (262*f) then you would know because of the burning smell coming from your computer. Updating your BIOS/UEFI, or trying different/newer monitoring software will get rid of those false readings for you. At stock speeds with a stock cooler the new sandy bridge chips will sit in the high 20's to low 30's at idle, and make their way up into the low-mid 50's when under heavy use. With an aftermarket cooler (I use an older Zalman CNP because I had it laying around and my mobo supports older LGA 775 coolers, but there are better/cheaper coolers on the market today) I have never seen my CPU get past 41*c when under a heavy load for gaming or video editing/rendering. In day-to-day use it sits at 24*c which is just 10*f above the room temperature in my basement.
From the looks of things your build is plenty cool, and anything less than 90*c is within the tolerance of these processors (though I wouldn't want to run one that hot for extended amounts of time, it would technically be within spec)