What cooler are you using? You need to keep a very close eye on temperatures when overclocking to make sure you don't fry your chip. You also need to make sure you tweak your RAM settings down to make sure your RAM doesn't limit your overclock. Also, having a quick look at your motherboard, there's no cooling at all on the power delivery components on the board, which means you'll have to be careful about pushing the overclock too high in case the motherboard can't supply enough power safely.
So, step 1: make sure you've got a decent cooler and you are using temperature monitoring software.
Step 2: reduce your RAM ratio to 1:1 (exactly how you do this varies from mobo to mobo) to make sure you're not accidentally overclocking the memory.
Step 3: Set the CPU multiplier back to the default (x10)
Step 4: slowly edge up the FSB until your computer becomes unstable.
For Core 2 overclocks,
AFAIK getting the FSB as high as possible is the key to improving performance, so it may be worth taking the multiplier down a step or two to see if you can push the FSB up higher - you can always try increasing the multiplier later to get more clock speed. Overclocking is an intricate balancing act! Incidentally, have you already manually adjusted the FSB in the second shot, or did you leave everything else on auto and just bump the multiplier up? If the latter, then I'd recommend a new motherboard as that one seems to be making up the FSB as it goes along, which is rarely a good sign...
As to the settings showing in your "stock" CPU-z shot, something is seriously wrong. The multiplier of x6 is the standard Intel setting for a computer at idle, so that's not a huge worry, but the FSB should be 266MHz, and motherboards shouldn't underclock the FSB automatically for any reason that I know of. Something very odd is going on there...