Basically stay on the 200 grit until all the nickel plate is gone and it's flat. (check with a metal ruler/stanley knife blade)
Once its flat move onto 400 and sand in one direction until the groves are all in the same direction (remember to rotate the chip 90 degrees every so often, but keep sanding so the grooves go the same way).
Once grooves are all the same way move onto 600 and sand in the opposite direction, do this til all the grooves are now the other way.
Repeat til 1000 grit.
1000 won't get you mirror shine, but thats not what you are after anyway, you just want it flat and not as rough as a badgers behind.
You can go all the way up to like 2000 grit and then brasso it to make it all shiny, but there really is no point, past about 800-1000 its all for looks really.
As for static, no idea, but like I say done 2 CPU's and never had a problem with it, just popped the plastic cover on the back and some masking tape down the sides to hold it on and away I went.
Thanks for the help.
I'll just wear my Anti-Static wrist band and hope for the best, does lapping increase resale value? How much you rekon an E6600 that only get 3.4 max lapped would go for?