This step is performed with the motherboard out of the chassis.

Insert a machine screw through each of the four holes around the CPU heat sink, with their heads on the back side of the board. While you hold the screws in place, sandwich the nylon washer between the motherboard and metal washer.

The order of the washers is important. Do not put the metal washer on first.

When attaching the CPU heat sink, be sure the fins are aligned with the air flow from the fans (as seen in the third picture). Having the flat side of the fins perpendicular to the air flow will cause your Xbox 360 to overheat.

Using the large flathead screwdriver bit, tighten the screws into the CPU heat sink. First lightly tighten the four screws in an X-shaped pattern as seen in the second picture, then follow the same X-shaped sequence to fasten the screws down.

Don't be afraid of a bit of tension - the pressure between the heat sinks and processors caused by sufficiently tightened screws is needed to retain the heatsinks.

Repeat the same process to attach your GPU heat sink.