The paste layer should be as thin as you can make it, just a smear. I do it with my finger but you could use a plastic implement. Do not use metal.
Yes, if you get a heatsink fan with the processor it will be ok
For ESD (static) protection you can use a special wrist strap which can be obtained at most computer outlets, however it is quite adequate to just ground yourself by momentarily grasping an unpainted metal part of the chassis or power supply before you touch any sensitive components.
The CPU will drop easily into the socket when the locking lever is in the raised position, you need apply no force so there is no danger of breaking any pins. Not sure about the P4 but some CPUs will go in the wrong way around. You must ensure that the cut off corner in the pin pattern is matched up on the CPU and the socket.
You should have no major dramas with this upgrade but I hope you are not going to be disappointed. The performaance increase you will get by going from 1.7 GHz to 2GHz will be so small as to be hardly noticeable. You may do better by increasing the amount of RAM you have, particularly if you currently have less than about 256MB. This is particularly true if you are running Win XP which really benefits from more RAM, 512MB is about the optimum.
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