[McG]

CoreTemp - How does it work?

AMD chips report the temperature by a special register in the CPU's NB. Core Temp reads that register and uses a formula provided by AMD to calculate the current temperature.
The formula for the K8 is: 'Core Temp = Value - 49'.
The formula for the K10* is: 'CPU Temp** = Value / 8'.

The sensor in AMD CPUs can report temperatures between -49C and 206C.

*K10 = Phenom (Agena), Opteron (Barcelona). The K10 reports a temperature value that is relative to a certain predefined value, it doesn't report the actual processor temperature! So take that into consideration.
**CPU Temp is because the Phenom\Opteron (K10) have only one sensor per package, meaning there is only one reading per processor.