After 1 day of searching, I have a solution to the symptom, not the problem.
My Imac24 (mid summer 2008) Intel Core 2 Duo 3.06GHz, 4GB RAM, OSX(10.8.2) w/ the NVIDIA GeForce 8800 GS 512 MB graphics card is showing an unrealistically low temp on the GPU Diode of 6 degrees C w/ a CPU fan running at max rpm of 3,600. Even when the CPU is 99% idle, the fan runs at 3,600, all the time, unless I turn the computer off or put it to sleep. This started about 2 weeks ago. Here's a screen grab from a great little app named, istat pro
I've tried everyting I've read in the forums except for running the AHT (can't find my disk and the D and option D solutions don't work). Nothing worked. I think the problem is a bad temp sensor on the GPU diode as my IMac is fine, except for the CPU fan being on all the time.
Just a few minutes ago I stumbled across this thread, https://discussions.apple.com/thread/2554924?threadid=2554924 and saw the solution to my symptom--a way to actually slow the fan down--written by Jez DK. His solution is genius, send a command to smcfancontrol (download that at http://www.macupdate.com/app/mac/23049/smcfancontrol) that limits the upper limit of the CPU fan. By default, smcfancontrol lets you set the minimum fan speed, but for people with the problem of the CPU fan spinning like crazy when heat is low, we want to slow the fan down. So, install smcfancontrol and issue the following command:
/<path where smc is installed>/smcFanControl/smcfancontrol.app/contents/resources/smc -k F2Mx -w 12c0
That line limits the fan to 1200 RPM. I set my limit to 1400 and here's what istat pro is showing now:
Like I said, this is just fixing the symptom, not the problem. Given that my IMac is 4 years old and is backed up every day, I think this is the best way for me to go. I'm not going to plunk down hundreds of dollars to get this sensor fixed. I may try to do something with automator to see if I can automate the fan speed a bit, so when things do heat up, I'd like to have the CPU fan spin faster than 1400 RPM, kind of like what would happen if the sensor were working ;>