Its Method 1
You got the front case fan sucking cool air into the case, possibly over the HD/s and hopefully some will go over the GFX and some under, and therefore the GFX fan should have a bit of flow, but also above too.
You got the rear case fan suking the warm air out.
The general flow, most of the time will be cool air in at the front-bottom and out at the rear/top
And so, the CPU Heatsink fan will be blowing cool air through the heatsink and towards the back
Im very sure ( although I have not looked properly ) that the holes for mounting the coolers are perfectly square, and so, if Im right, then you can also mount the fan at the bottom, so it blows air upwards too!!!
This will have a negative in that the air will be warmer as its drawn over the GFX Card, but positive in that the CPU might be using a 120mm FAN andwill help to suck the air out of the heatsink. This very much depends on the case type however.
Also, please note,that all cases offer different cooling properties.
If you are gettign such high temps, it might not be your cooler thats the problem but it might simply be that your case might be poor at cooling?
I mean, your systems temps being as high as they are, makes me think this might be very likely.