i clean both surfaces with rubbing alcohol.
mask off the area to be applied (which is usually a guess from experience of how much the CPU covers)
then i apply a line on one edge of the masked area. if the heatsink has a grain direction, i use the edge which is perpendicular to the grain direction. this avoids bubbles in the next step.
next i take a smooth card(credit card or coolermaster card that comes with HTK200) and spread it while making a very low angle b/w the card and surface.
then i make a line on the opp edge if necessary and repeat.
after all the area masked off is covered i make a third line on an edge perpendicular to ones i used(parallel to grain now) and do a final time.
i end up with this:-
http://img.techpowerup.org/120722/10032012092.jpg
or this
http://img.techpowerup.org/120722/10032012088.jpg