Bit a newbie on overclocking and just wanna make sure I'm not doing anything wrong. The cpu speed is measured by the fsb x the multiplier. In order to raise the fsb you must also increase the core voltage or vcore accordingly. The vcore should not exceed the VID Voltage Range limit to prevent overheating. The cpu heat will also increase as the vcore is increased and should not exceed Thermal Design Power. Does that sound right?
What I'm really confused about is how the memory all fits into this, how would I OC the memory?

Specs
e8400
4gb (2x 2gb) pc2 6400 CL5 cosair
ep35-ds3r

#1 - This is not necessarily any need to increase your Voltages. In fact I both Overclock and Decrease my Voltages at the same time. It is only necessary to increase the voltage to reach maximum overclock. It depends on what you need to do with the system.

Also the VID limit is not to prevent Overheating, it's to prevent excessive voltage from damaging the chip. You can Overheat w/o reaching max VID and you can cause damage by exceeding the VID w/o reaching maximum recommended thermal levels. But Increasing the VID does increase heat generated.

Now to your quesiton........

Start by setting the Memory Multiplier to 1:1
This will run your RAM at 333Ghz and your CPU will be running at 3.0 Ghz.
Then increase your FSB slowly which will increase your CPU as shown.

As you increase, monitor temps while under heavy load.
Increase the Voltage if you think necessary.
Don't use "Auto" for voltage - it generall applies more power than needed.

^zen, VID is for just telling the motherboard how much voltage it needs at stock. The absolute MAX voltages for the 45nm is 1.4v. (You can go higher, but not recommended if planing to run CPU for a while)

@OP:
GUIDE: Overclocking On P35-DS3L
The BIOS settings should be same/smiler for the DS3R.

Well it seems I'm on the right track. I ocd at 400fsb with 9multiply and had the vcore 1.25, memory set 1.1 (800mhz) memory frequency right on. I ran prime95 for 7hours last night w/o an error and highest temps were around 51c. So it seems quite stable atm but here lies the problem: If I increase fsb anymore it outgoes the 800mhz which is no recommended by looks of ya guide zen. Is this the cpu limit with the current ram I have?

Change your Memory Multiplier to lower your Memory speed a bit and then raise your FSB a little more, if that lets your CPU run faster than the limit was your Memeory. If not then your CPU is at its limit for its current voltage.

Unless your RAM can be successfully OCed you will be limited to a 400FSB on DDR2 800.

So why can you only overclock your CPU and not your memory? Just because its rated for 800MHz doesn't mean it can't go over that. See how far you can push the ram. Or as the others have suggested, lower the divider to get more CPU, though realize this could impact some benchmarks.

The divider cannot go any lower so I guess I'll up the memory. Is the ram more fragile than the cpu? will I have bigger risk increasing this? I really can't afford any pieces blowing up on me.

My plan is to up the DDR2 OverVoltage Control by +0.1v which will put me at 2.0v (1.9v Tested at JEDEC) then increase the fsb to 450 (4ghz oc) which brings the memory to 900mhz. Seem good?

What exact RAM are you using? Generally RAM can OC to about 1000Mhz or even higher esp. for the Crucial Ballastix or other D9 based RAM. RAM (imo) is more sensitive to OC than a CPU.

Corsair XMS2 pc2-6400 DDR2 800MHz CL5
I have 2x gb (4gb) of this.

http://www.newegg.com/Product/Prod [...] 6820145184

With that RAM you should be able to hit 900-1000Mhz, may require +.1v on the RAM.

yeah... I bought 2 GB Mushkin ram rated at 4 4 4 12 timings at 800 mhz... and overclocked it to 1200mhz 5 4 4 12.... its amazing ram =D

Well I tried and my computer just had a fit, I would get to that black screen that say "dmi load" some crap with the ....after it and then get stuck in a restart cycle. I guess I'll investigate more on the ram issue later, could of possibly been the cpu at like 4050mhz idk heh, maybe 2.0v to much for memory.

The standard for DDR2 is 1.8v. Upping the DDR2 voltage by +0.1v puts you at 1.9v which most likely is not enough for the overclock you're trying to achieve.

I have used several different brands of DDR-400MHz sticks, and all have overclocked to DDR-450 without a bump in voltage or needing to relax any timings. (200 to 225 without bumping any voltages for both of my Asus boards.) I would think DDR2-800 should be good to DDR2-900 without needing to go crazy. The specs call for 1.8v, but there is a lot of DDR2 ram out there that runs at 2.0-2.2v. I say push it to 450MHz, same timings, but try it with 2.0v.