I am a little noobin on this,

So I got a Dell XPS laptop and it came with 2 video cards in it

Standard Intel-HD graphics card
and
Nvidia Geforce GT435M

When oblivion attempts to auto detect it automatically puts it on the Intel-HD card and medium settings and it doesnt give me an option to select the geforce card.

I am on Windows 7 64 bit - Any help on this would be greatly appreciated

also wanted to add that when it attempts to automatically detect it says "Video Card Unrecognized" - I have the latest drivers for my Geforce installed

I think "Video Card Unrecognized" is because your video card model was released after Oblivion. Mine says the same thing.

Put the graphics on full and see what happens :shrug:

The Intel HD series are integrated into the cpu, but it seems you have an additional integrated card in the mobo. This is a serious design flaw with the laptop then. Normally the Intel graphics in the cpu will disable itself if an actual graphics card is installed however since this additional card is also integrated it wont disable the Intel one.

In other words, you have to 2 video cards fighting each other and the lesser of the two is winning there is pretty much nothing you can do to fix this aside from getting another laptop.

Honestly laptops are not good for gaming.