1. I was wondering how common it is to come across animals and stuff like that?
Very common in the wilderness. Never in towns.
2. Is it possible to have a pet horse or dog?
Yes you can buy horses from every city except the Imperial City (theirs went missing). You can't have dogs though.
3. Is there alot of Armor and stuff for role-playing?
There's quite a lot of different clothes and that, but I was disappointed in the lack of trousers for girl characters. There's only a couple, and most of them look weird! I use the blacksmiths pants usually, they look like black skinny jeans lol.
4. Is Oblivion one of those games where it takes forever to walk from city to city?
If you're walking, yes. Running or taking a horse is faster, and you can fast travel but many people choose not to. I suggest you walk unless you have something really pressing to do because there's a lot of cool places you'd otherwise miss.
5. Whats the DLC like?
I think it's pretty good. I haven't tried them all, mind you.
Fighter's Stronghold- You get a castle of your own down the road from Chorrol along with some guards, I liked this one a lot but I would complain that even after you buy all the furniture and that it's still quite bare.
Knights of the Nine- I loved this one. A whole questline with an interesting story, and you get to stay in a pretty priory in the woods
No complaints.
Orrery- This one's difficult, I liked it because the completed thing looked cool, but it wasn't very functional ( it gives you different buffs depending on the month) but I don't think it's really worth buying because the quest line is short and boring.
Spell Tomes- Doesn't cost that much MS Points so I bought it. Adds books about the world that teach you new spells. I liked this one. No complaints.
Thieve's Den- I liked the idea of this one, and the quest and "house" you get are really cool. However, I just didn't like the area but that's just me! No real complaints.
Wizard's Tower- My favourite one. A seriously cool Mage tower on the top of a mountain. Has an alchemy garden inside, a secret vault with imps in it and Spell Making and Enchanting altars inside! (Previously only available to Mage's in the Arcane University, which involes doing a quest in every city to get in).
I haven't used the others, but apparently the Horse Armour PAck is absoulutley terrible, going by what I've heard. I think it looks cool, but not really worth 200 MS Points! For a full list of the DLC's and their price- http://www.uesp.net/wiki/Oblivion:Plug-ins
6. This is my Last one...Can someone tell me whats fun to do?
I love adventuring around Cyrodiil. Talk to everyone, look at everything! For plain fun though, I like to make a save then start attacking random people in th Imperial City MArket District and cause a big fight. Obviously re-loading the save afterwards!
Tips- Save often! And use multiple saves, not just one! If it corrupts you'll be sorry (I was!). Also, the http://www.uesp.net/wiki/Main_Page is incredibly useful for finding out about quests, NPCs, lore and many other things. You should try the Thieve's Guild, it's a really fun quest line! A lot of people hate the main quest, but I think it's one of the best quest lines in the game. I would recommend you play through it at least once, as with every other faction/quest line. Oh, and alchemy is a really good way to make money! All you need is a mortar and pestle, then find a farm or some fields and pick all the crops. You can make them into Restore Fatigue potions for easy money.
EDIT: Just seen your last question. No, you can't add mods to the XBOX :sadvaultboy:. However, the game is still great and it will take you a very long time to get so bored with it that mods are required :thumbsup: