first keep the temperature sensor
between processor & RAM.
1.this fan will start only after the Temperature goes above "Custom Set temp." (in ur case 38 degrees). it'll be indicated in the display. #3 will be visible (near fan symbol - in display).
2. yup, it remains static. it'll show as rotating when one fan gets activated.
3. 38 is ok, i've set it to 33

, 33+ is reached when gaming in morning hours

.
recheck fan cables, coz the top fan shud be OFF by default. ie, shud turn ON ONLY when the temp. is reached.