Just now, I was sneaking around Castle Cheydinhal, when suddenly a guard spotted me. I paralyzed him and stabbed him to death before he opened the

STOP RIGHT THERE CRIMINAL SCUM

Dialogue. If this was real, I would be able to keep on sneaking. Now, every person in Cheydinhal is trying to kill me. So is there any way to fix this annoying problem?

Try out this mod:
http://www.tesnexus.com/downloads/file.php?id=5977

Or if its only the psychic guards that annoy you then try this one
http://www.tesnexus.com/downloads/file.php?id=11911

There also is a couple amazing sneak overhauls http://www.tesnexus.com/downloads/file.php?id=6359 that allow you to kill someone without instantly becoming visible to everyone around.

RGO is working out some serious bugs. one whe re it will oft crash in certain places and another where there is a huge isue with quests

Omniscience is a pain. I snuck up behind a stable keeper dude, turned invisible, and killed him, stole a horse, and rode it halfway across the world before I realized my bounty went up every time I got off to fight something.

If you kept up with RGO releases, you would know both those "serious" bugs have been "seriously" fixed in 2.05 (or, to be more specific, the CTD issue was fixed in 2.04, and the dialog issue was resolved in 2.05).

Seriously ? I should upgrade.

Thanks for clearing this up, I was wondering if this was some new issue I had not heard about