1. I just modded Skyrim using the NMM so I have a basic understanding of things.

2. I am modding Oblivion now and want to install this Sky mod

http://oblivion.nexusmods.com/mods/7694/

It says to-Simply copy the folder "Textures" to your "Oblivion\Data" directory. An archive invalidation could possibly be necessary, so that the game can load all the installed textures. The archive invalidation you can easily do with the "Oblivion Mod Manager". I already have a folder there called Textures and my PC won't let me put another one there? I then noticed their uninstallation directions said "Uninstallation:
Delete all files listed above from your "Oblivion\Data\Textures\Sky" but I don't have a sky folder?

3. So I unzipped the file and copied their folder called Sky and pasted it in C:/Program Files (X86)/Steam/Steam Apps/Common/Oblivion/Data/Textures/

4. I find it odd that the only other file Bethesda has in the folder Textures is Effects/TerrainNoise.dds

So it now goes:

C:/Program Files (X86)/Steam/Steam Apps/Common/Oblivion/Data/Textures/Sky/a bunch of mod files
So all I did was move the mod folder titled sky into C:/Program Files (X86)/Steam/Steam Apps/Common/Oblivion/Data/Textures

Any help is greatly appreciated!

The better choice for mod installation in Oblivion is http://oblivion.nexusmods.com/mods/22368 (which also comes with automatic archive invalidation.)

As that is a 'simple' mod (I have it already myself) all you have to do is drop the contents into the Data folder.

It will ask you if you want to merge the Textures folders because you already have one, just click the option to do that, and you are good to go.

That is simply because Oblivion by default has all of it's other texture files packed in to BSA files, including it's sky ones. Placing new files in the textures folder will override them (actually archive invalidation is often needed due to a glitch in how Oblivion handles it by itself.)

Thanks for the reply.

Perhaps before you go any further with modding maybe you would consider moving your game to outside of default program directory? This is to avoid any UAC issues with Windows Vista and up. Also I would second vote for using Wrye Bash especially if you are thinking of doing a heavy modding.

I looked at wrye Bash and it looks complicated and seems to require installing multiple pieces of software on a new windows 7 computer. I did install OMM

You can forgo with Python version and use the standalone version instead. It's as easy as dropping the content of the archive into Oblivion directory or just use the installer to do it.

I use the standalone (no python) version of Wrye Bash and it works great. I have a new Windows 8 laptop.

It was a bit of a learning curve for me since I was not particularly computer literate when I started. But I have grown to love Wrye Bash.

It makes correcting my mistakes fairly easy with its ability to install and uninstall and replace any replaced files with the original ones when you uninstall a replacer mod.

The pictorial guide is particularly useful in learning how to use Wrye Bash.