I had exactly same issue with my GA-Z68XP-UD3 and i5-3570K. The problem was the old BIOS version, which didn't fully support IB CPUs, so I had to flash a new one. You can't do this with your CPU, because it keeps rebooting and you are not able to start the Q-Flash. You need to get a SB CPU and then flash a new BIOS. The BIOS version you need for your new CPU is at least "FC" in your case, so check the version you have. Be sure to reset your BIOS after the flashing and then load optimized values. It should be able to boot up with your new CPU properly then.
However, this didn't solve all of my issues. I'm having severe problems with system lock-ups, BSODs etc and I'm not even trying to overlock, which does not work properly anyway as you can't set the multiplier higher then 38x... :-( I'm still not sure where is the problem, but I did spend last 2 days searching for a solution. At the moment I'm thinking about getting rid of my Z68 board and getting a Z77 one.