Great concept, incredible really.
The core of my issue is this: being detected by an NPC when I'm not in their L.O.S. and haven't moved (like a guard detecting me through a wall as they walk down the street, but I'm not in their L.O.S. and haven't moved or turned).
I believe the problem is related to detection based solely on range, and tested many different settings on the ini file but all of them were unable to change this fact. The effect was really noticeable once I changed the first setting: "BASIC - Base Sneak Value" from default -25 to -15.
Am I correct in understanding that no matter what the variables are, if I haven't moved and am not in L.O.S. I shouldn't be detected?
Not exactly.
First of all, Guards are weird, and seem to be hardwired to have different detection rules. I have a plan to (hopefully) address that in the next release, which will have other improvements to make the experience smoother as well.
Secondly, there are five components to calculating an NPC's detection level against you. Sight, Sound, Skill, Combat, Base Sneak Value. These five combine together to calculate detection. Of these five, only three diminish over distance: Sight, Sound, and Skill. So, if you are not moving, and they do not have line if sight, you still have to go against their skill, adjusted for combat, and adjusted by the base sneak value. Combat only applies if you attacked the NPC or are in combat with someone else, so lets assume you aren't and drop it from the equation. That leaves you with a Skill vs. Skill contest + the base sneak value. Their chance to detect you via Skill improves the closer they get to you, regardless of LOS or if there is a wall in the way. But ultimately, if your skill is higher, you would win that, as long as the Base Sneak Value doesn't wreck it.
That's actually where you went awry. The Base Sneak Value is ADDED to the NPC's ability to detect you, so by increasing it to 70, even if all the other factors were 0, it guarantees that they will spot you because it is outside of Sound, Skill, Sneak, and Combat. It's totally separate and unaffected by distance. As long as you are in range, that flat amount is applied. So in your experiment, you really should gone the other way and lowered it. If you made the Base Sneak Value - 100, odds are no one would ever detect you in a standard vanilla game.
Okay, so here are the other pieces of the puzzle. There are three other game settings that detemine the minimum value required in order to be detected. The first is for standard unaware or friendly folks (random NPCs in cities and guards). If their detection level against you is 0 or greater, you will be spotted. The second is for unfriendlies who are on a alert or NPCs that are suspicious. The min detection level for that is -20, so it is easier for them to spot you, because they are on alert. (It's basically the same as a +20 bonus.). The third setting is if you are engaged in combat with the NPC. Not only is there a huge bonus of +100 if you attack them, but the minimum detection level drops to -50 because they are actively hunting you down, so that's basically anothet 50 pt. bump. That's why it is so hard to shake someone after you have backstabbed them. Not impossible (unless they are guards), but without a ridiculously high sneak and chameleon to boot, in standard Oblivion, once you attack someone, they will find you 99% of the time.
Sorry this is so drawn out. Hope this helps, and please let me know if there is anything you need clarified.
saebel