Looking at the screenshots, it seems you have a black sky? That is usually a shader problem. Try disabling(or enabling) HDR first, if that doesn't work try downloading the original shaders and put them into your shaders folder in oblivion/data
I do not have a black http://img137.imageshack.us/i/oblivion201010021926086.jpg/, so I do not believe it is a shader problem.
HeyYou advice fixed my initial problems, I went from http://img440.imageshack.us/i/oblivion201010020956289.jpg/ to http://img823.imageshack.us/i/oblivion201010021926371.jpg/, and http://img844.imageshack.us/i/oblivion201010021003108.jpg/ to http://img196.imageshack.us/i/oblivion201010021003137.jpg/ by changing fLODLandVerticalBias which was 0 to 1200. I walked around the imperial city and all looks ok besides http://img547.imageshack.us/i/oblivion201010021928389.jpg/ http://img547.imageshack.us/i/oblivion201010021928475.jpg/
When I venture http://img718.imageshack.us/i/screenshot17kg.jpg/ is when things get really http://img10.imageshack.us/i/oblivion201010021929519.jpg/, I am guessing maybe this has to to with the ini LOD settings, but I have no idea.
Here is a http://img842.imageshack.us/i/screenshot21n.jpg/ shot by the imperial city bridge and the one by the anvil light http://img714.imageshack.us/i/oblivion201010021929336.jpg/... http://img836.imageshack.us/i/oblivion201010021929397.jpg/?
Another http://img714.imageshack.us/i/oblivion201010021929336.jpg/ of WTF?
I have a new PC that has plenty of power to run Oblivion, I am using win7, I have Oblivion installed at C:\BethesdaSoftworks\Oblivion, I also had it installed at C:\Oblivion and received the same errors. I do not have any mods installed this is totally vanilla.
I have done google searches and searched this forum and have not found what could cause my problem, I appreciate all and any help.