Well this is going to be a quick update.
I finally figured out what the issue with the fan is. It looks to me it is due to me installing a 100GB 7200 RPM drive. The drive runs hot. It seems that there probably is a temperature sensor somewhere near the internal hard-disk bay that seems to be causing the problem.
I also bought the drive bay hard disk adapter (Toshiba doesn't provide the drive cage so I had to improvise). I put the hot drive in the adapter and boot off it. With the 5400 stock drive in the internal bay there is no fan racing.
Well, I am waiting for either Notebook Hardware Control or speedfan to come out with fan support for the Core Duo. Until then I will have the 5400 rpm drive in the internal drive bay.
The one thing that really bothers me is I have to switch drives physically to use the CDROM, I guess I could install xp on the 5400 RPM drive. But the 7200 RPM drive is so much faster. Additionally if the second SATA drive is not present during boot, you will have to restart your machine before it is recognized.