The heat sink is connected to the collector, as there is a "C" in the image on the datasheet next to the heatsink as well as the one between "B" and "E". The two parts labelled "C" are ends of the same bit of metal.
1 W is the maximum, and that needs a huge bit of board. The transistor will then have a temperature rise of 125 deg C per Watt, so 125 deg C above ambient, so about 150 deg C if there is nothing else heating it.
I wouldn't run a transistor like that much above 0.2 W. If you need more power, look for a larger power rating transistor.