Can a processor upgrade cause BSOD?

Installed properly and working properly, a new processor shouldn't cause things to crash. It's likely that the new processor is either overheating or defective.

Make sure your heatsink is making good thermal contact with the processor — it might be mounted wrong, or you might've used too little thermal paste, or spread it unevenly. Also check that the heatsink's fan is spinning; sometimes wires can get in the way and hold it in place. If all else fails, switch back to the old processor and see if the problem goes away, and if it does, contact AMD or the retailer about doing a warranty exchange on the new one.

I agree that it sounds like the processor is defective. If you have a defective piece of hardware, it can definitely give a BSOD. I cant remember the rule of thumb but I think if you are getting a BSOD under certain circumstances and not random then it is a hardware related BSOD, if you get random BSOD it is software, or else its the other way around. Sorry I cant remember the exact rule. In any event you could try downloading a piece of software called "Who Crashed" it will look at you minidump files and give you a good idea what software or condition is causing the crash.

I will paste a link to the site here: http://www.resplendence.com/whocrashed

Another thing you could try is to make an image of your machine, then restore the image with the restore to dissimilar hardware or universal restore option, assuming you have that option with the image software you would be using. This will strip away your drivers and have Windows reinstall the drivers for your computer. This would save you a lot of time over a complete clean install. That being said, if you look at the simplest explanation and what has change on your machine, your problems started just after you installed this new processor, so that is the highest likely cause. It sucks that you might not have a recourse on the used CPU, but in my experience that cost savings on buying used hardware versus new, it's just not worth the risk. Just buy new hardware and get a lot less headaches.

As for the overheat possibility, I suspect that is not it, if a CPU overheats you normally get a shutdown condition or a whole system freeze issue and if it was incorrectly installed the machine would not boot, not to mention you really can't install it wrong because the socket is shaped to only fit one way with the CPU.

I hope this information was helpful, good luck.