When i go though the tutorial on Oblivion I am un able to get past the first second room of the underground tunnel area. The area loads up but the game crashes about a second after the area shows up, before i even get a chance to move.

When i put the same disk in a different computer is works perfectly. I tried uninstalling and reinstalling and that had had the same issues. I tried the official patch and still had the same results.

The odd thing is that i am able to play from save files brought in from other computers like normal but i cannot create a character on this one.

The PC in question is running Windows vista and is able to run the game at high quality. The disk works on other computers. I am honestly not sure what to try next.

You might be having an issue with the spawning of the Mythic Dawn Agents, Try installing http://www.tesnexus.com/downloads/file.php?id=20348, hopefully the Vanilla shaders are the fix.

I tried that and it didn't solve the problem. I can play on files i copy from different computers normally and i never have issues with purple grass or green blood. The new shaders honestly made the game lag a bit.

The disk has nothing to do with running the game once it is installed. The disk is just there for authentication, and all the game data is loaded off of the Hard Drive.
Post a dxdiag.
XP: Go to Start->run, type “dxdiag” and hit enter. Click the Save All Information button near the bottom right. This will save a Dxdiag.txt in C:\ by default. Then open the dxdiag.txt and copy/paste the information into your post.

VISTA/Windows 7: Go to Start->Search, type “dxdiag” and hit enter, click the Save All Information button near the bottom right. This will save a Dxdiag.txt in C:\ by default. Then open the dxdiag.txt and copy/paste the information into your post.