I have a computer here that randomly restarts, but usually during games. I thought was the CPU overheating so I checked the tempature and it says its averaging 120C!!!!! This can't be right. Any other ideas?

If it's 120F then it's ok (48C), but 120C is very, very bad! Don't even think of looking for another reason for the crashes until you've fixed this one.

Open the machine up and take a look at the heatsink/fan on the CPU. Is the fan actually running whilst the machine is on? They can and will fail. It'll definitely need to be replaced if it's seized - replace the heatsink and fan simultaneously, they get sold as one unit.

If it seems to be running ok, then look through it (whilst it's off!) and see if there's dust buildup between the fan and the heatsink. My machine is currently having crashing issues and the heatsink had been completely blocked by dust - my CPU temps were around 80C! Taking the fan off and carefully cleaning out the dust immediately dropped my temps down to 60-65C. (Oh, and wait for the heatsink to cool down before doing this )

If both of these are ok, and your motherboard temperatures are normal (it should be under 50C) then perhaps your heatsink isn't correctly mounted to the CPU - sometimes the thermal goo between the two dries out, or it's not applied properly, or it wasn't applied in the first place! Disengaging the heatsink, cleaning the original goo off the heatsink base and the top of the CPU with isopropyl alcohol, applying a new bead of goo to the CPU and refitting the heatsink might help. If you do this, you *will* need to use new goo even if the original application turns out to be ok - trying to reuse the old goo will give you airbubbles. Which are bad.

If the motherboard temps are really high as well then you need to look at the airflow through your case - try running the machine with the case open to see if things improve. But you can't do that permanently, because you hit dust problems (like I did...) You might need an extra case fan.

Once all of that is sorted out, don't forget to check your video-card temperatures as well - there are utils to get this info (I use ATIInfo for my Radeon, not sure about the NVidia tools.) Dust cleaning is also useful for the card fans.

There is no way the computer would even turn on if the CPU was truly running at 120c. Something else is happening. It always restarts during system intensive tasks. Could I have a faulty power supply? This is starting to drive me crazy.

There is a chance your temp monitor is bad. If the motherboard "thinks" the CPU is 120C (when in fact it is not), then most will shut down to protect itself. Do you have this type of motherboard ?

I've seen system re-starts for a whole variety of reasons... settings in my LAN card driver (these restarts caused by something coming thru on the cable modem), faulty power supplies, damaged motherboards (some caps blew), etc...

I take it you've cleaned all dust out as pelrun had indicated... that alone can interfere with temperature monitoring.

I feel your frustration and wish you luck figuring this one out.

If you have your system overclocked. Unclock it and see if that helps. Most of the time it is dust on your fans that cause this or dust in your intake air openings on your front benzel cover. You may have a fan that the rpm's are just running to slow.
As gadgetsmith has said you may have a faulty reading and the computer will shut down. Leave your cover off and just observe it or put a floor fan and point it toward the computer with the cover off.
Again clean all the dust off. can't stress this enough.

my computer used to have random resets, turns out it was the power supply, but if the temps are that high i doubt its a power suppy problem

Sorry,I dont care what cpu he has,if it is really sitting at 120c then he aint posting up.That thing would be fried.

I play around with overclocking a bit and my machine is aircooled.I idle around 36-38C and under load It gets up around 52-54C and I have a P4 Prescott,those are one of the hottest runners there are.

I have 3 120 MM case fans on a fan controller and a 92 MM on the heatsink.

Random reboots is more times than not either a powersupply or a videocard thats going out.

Don't forget about your video card. sometimes in graphics intensive programs your card temps will shoot up, especially if you only have a small fan on it and poor case ventillation. One other questiion, how are you monitoring the cpu temp? sometimes mobo bios temp monitors aren't very accurate too.