Hey.
I have trouble with shadows in Oblivion. I won't describe what it is about, here are links to YouTube.
http://www.youtube.com/watch?v=sJ2AuNm-sOA
http://www.youtube.com/watch?v=fAEYGtdkLhE
In the beginning I thought it's because of mods, which I had so many (QarlsTP3, better flora, fauna etc, Natural Environments). I was trying different options, then I reinstalled Oblivion. Still the same.
I think that in the very beginning there wasn't such a problem. Ha!, I'm 100% sure about that.
Of course, I can play without shadows, but my goal is to play on the highest standard. And those shadows are so ratty...
At first time I was playing version 1.1.511, now its 1.0.228 without any mods.

My PC specification:
Windows XP SP3
Amd Phenom II x4 955 Black Edition
4GB RAM
NVIDIA GeForce GTS 450 1GB

As you can see, hardware is quite good.
I hope that You'll find the solution.

regards,
Tom

You really need to update to 1.2.0416. You are not going to be even remotely capable of avoiding this if you wish to mod your game, as pretty much every mod you install nowadays requires 1.2.0416.

Ha ha ha! Oh my gracious God! It worked! I was thinking 'bout everything, but not about this!
Thank you man!