Hey

I'm new to these forums and am having exactly the same problem from a Steam version of Oblivion. Dxdiag is below:
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System Information
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Time of this report: 7/16/2011, 10:44:23
Machine name: ROSS-PC
Operating System: Windows 7 Ultimate 32-bit (6.1, Build 7601) Service Pack 1 (7601.win7sp1_gdr.110408-1631)
Language: English (Regional Setting: English)
System Manufacturer: TOSHIBA
System Model: Satellite L300D
BIOS: InsydeH2O Version 1.20
Processor: AMD Turion X2 Dual-Core Mobile RM-70 (2 CPUs), ~2.0GHz
Memory: 3072MB RAM
Available OS Memory: 2814MB RAM
Page File: 1540MB used, 4272MB available
Windows Dir: C:\Windows
DirectX Version: DirectX 11
DX Setup Parameters: Not found
User DPI Setting: Using System DPI
System DPI Setting: 96 DPI (100 percent)
DWM DPI Scaling: Disabled
DxDiag Version: 6.01.7601.17514 32bit Unicode
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Display Devices
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Card name: ATI Radeon 3100 Graphics
Manufacturer: ATI Technologies Inc.
Chip type: ATI display adapter (0x9613)
DAC type: Internal DAC(400MHz)
Device Key: Enum\PCI\VEN_1002&DEV_9613&SUBSYS_FF6A1179&REV_00
Display Memory: 1404 MB
Dedicated Memory: 253 MB
Shared Memory: 1150 MB
Current Mode: 1280 x 800 (32 bit) (60Hz)
Monitor Name: Generic PnP Monitor
Monitor Model: unknown
Monitor Id: SEC3741
Native Mode: 1280 x 800(p) (60.004Hz)
Output Type: Internal
Driver Name: atiumdag.dll,atidxx32.dll,atidxx64,atiumdva.cap,atiumd64,atiumd6a,atitmm64
Driver File Version: 8.14.0010.0678 (English)
Driver Version: 8.632.1.2000
DDI Version: 10
Driver Model: WDDM 1.1
Driver Attributes: Final Retail
Driver Date/Size: 8/18/2009 03:20:38, 3105280 bytes
WHQL Logo'd: Yes
WHQL Date Stamp:
Device Identifier: {D7B71EE2-D553-11CF-6F70-60DFA1C2C535}
Vendor ID: 0x1002
Device ID: 0x9613
SubSys ID: 0xFF6A1179
Revision ID: 0x0000
Driver Strong Name: oem2.inf:ATI.Mfg.NTx86.6.0:ati2mtag_RS780M:8.632.1.2000:pci\ven_1002&dev_9613
Rank Of Driver: 00E62001
Video Accel: ModeMPEG2_A ModeMPEG2_C