Yeah. That's bad. Those ripples and gaps fill with air, which is, unfortunately, a pretty good insulator. That slows down the heat transfer to the heatsink, which results in overheating of your CPU and GPU. Thermal paste is usually better than thermal pads, as if properly used, it will conform to the the surface of both the CPU/GPU die and the heatsink, resulting in a better connection between the two, but if the gap is pretty far, as in your case, you need to use a _really_ thick layer of paste to bridge the gap, which means that unless you're using a really thick consistency paste, you're likely to end up having the paste spill and run over the sides, because it won't stick together well enough to properly fill the gap.
A thin layer of paste is normally recommended because most heatsinks are set to virtually lie right on top of the CPU/GPU die, which means there isn't too much room between the two in the first place, and so if you put a lot on, it'll all just squish out and end up all over. Also, it's easy to develop air bubbles and pockets in a thick layer of paste, which would again cut down on heat transfer.
What all this basically means is that in the case of a large gap, such as appears to be the case with yours, you're better off using thermal pads because they'll be better at bridging the gap than paste would be. In general terms, using thermal pads are easier than thermal paste, as it's just peel and stick, and, as previously mentioned, they're better for large gaps. The problem with thermal pads is that they're usually not quite as conductive as thermal paste is, so they transfer heat a little slower, which results in somewhat higher temperatures.
Edit:
So, I did a bit more research, and found an old thread that might help (
http://forum.notebookreview.com/showthread.php?t=236790). It seems that the gaps in your M1530 are small enough for thermal paste to be a good option after all, which means that your problems probably just come from a poor application of thermal paste. Unfortunately, the only way to learn how to apply thermal paste well is to practice. As long as you have the paste to spare, I recommend trying out the various different ways of applying thermal paste, screwing down the heatsink, waiting a few minutes, and then pulling the heatsink back off to see how well you've done. Remember that some of the thermal paste will usually end up sticking to the heatsink, so make sure that any voids you see on the die aren't filled in with a corresponding dollop of thermal paste on the heatsink. Personally, I use Arctic Silver Ceramique (non capacitive for easy CPU/GPU use!), and the line/pea-sized dollop carefully squashed out with the heatsink. Do note that different types of thermal paste will apply best using different methods and different amounts, due to their consistencies, types, and abilities. I hear that ICD7, for example, is really, really, thick in consistency, and so it takes a lot of effort and pressure to spread it out. Arctic Silver 5, as another example, is capacitive, so you're actually probably best off pre-spreading it with an old credit card or something else, so that when you apply the heatsink, it doesn't spread too far past the die and short out anything (like a motherboard, ouch!). Also note that with some thermal pastes (like AS5), there is a burn-in time before the paste will cure, and reach maximum efficiency.
Or, of course, you can go the simpler way, buy a pack of thermal pads, peel and stick, and you're done. They won't usually work quite as well as a "proper" application of thermal paste, which means you'll run about, oh, probably 5-10 degrees C higher (depending on thermal pad brand, type, and composition, thermal pad efficiencies vary just as much as thermal paste efficiencies!), but if you're not really stressing the system, it probably won't matter, and it'll be a lot easier. There's a reason why many consumer notebook manufacturers take the easy way out and use thermal pads (or even foil in some cases (!)) as the interface material. It's simpler, faster, and more idiot-proof.
Problems? See this thread at archive.org.
