I tried to reinstall Oblivion to get it working with mods again after my hard drive got wiped, but upon starting up the game is crashes before anything can happen.

I have no files from a prior installation, and nothing has changed in my system from before (except Windows 7 version).

Only things I could think of that could be an issue:
-It was installed to C:/Games
-I have Skyrim installed with lots of mods
-Skyrim is installed via Steam and the steam directory is in C:/Games aswell
-I have BOSS and Wrye Bash installed for Skyrim (dunno if that could be doing something to Oblivion)
-I have the GOTY edition so it is up to date


At this point I have no clue what could cause this, as this has never happened. Thanks for your time, any help is much appreciated.

You might have to run the game in XP compatibility mode. Also, I think Oblivion can not be installed in the Program Files Directory on W7 due to UAC issues. This is because the game wants to create an INI file in the Program Files directory. I see you put it into a different directory.

Try the compatibility mode.