I bought the regular version of the game but now I want the GOTY edition. There are a couple things. Will my save work for the GOTY? How do the dlc's work, are they actually in cyrodiil? Can I play them even though I just started the normal game? How do I start the dlc's and can I leave at anytime and go back? Does any of the dlc add anything to oblivion. Finally I hear about this glitch, the vampire glitch. How can I avoid it? Thanks for helping. Once I get some info and answers in going to grab it because I here shivering isles is amazing.

This link specifically answers your questions, including the question about vampirism.
http://www.uesp.net/wiki/Oblivion:Playstation_3

Although I play on 360, I am almost 100% positive you can continue a character you started in the regular PS3 version after you install the GOTY version. You simply have more content to play with (SI in particular).

Thanks but this really doesn't have any of the answers I am looking for. I'm trying l figure out how it starts.

Yes.
Yes, they just add content. They're not like other games that add different modes or whatever.
Yes, why wouldn't you?
All the DLC adds to Oblivion, what else would it be for? If you mean the location, only SI and KotN add stuff to Oblivion.
You mean the face bug? You can't avoid it.

360 here. But they are basically the same (gasp! Did I say that out loud?)
-If you install the GOTY, all your saves from your pre-GOTY game will work. At least it did for me, way back when.
-Yes, sort of. Both DLCs have, for lack of a better word, links to your present day Cyrodiil. After 24 hours in-game, you will receive a pop-up message that you must click to make go away, about a Strange Door. You will receive an undiscovered map location. In conversation, you will see new topics about problems in Anvil. You can also get the quest by overhearing a conversation between two NPCs, this is how it triggered for me first time out. Trust me, the game will let you know, and it will let you know pretty fast.
-You start by investigating... you've got the original game right? Ask around towns n' stuff.
- There's a certain point in the SI, where you won't be able to leave.... for a long while. But then you will be able to again, so don't pick up crap loot, would be my advice.
-By add, do you mean weapons and armor? Yes. My favorite claymore is from the Shivering Isles, though they drew it so it looks shorter than any other claymore ... but I digress. There is serious loot to be had in both DLCs. There are awesome spells to be had in the SI, as well as some hardcoe alchemical ingredients that give you crazy 5 to 6 effect poisons. I've been slowly writing them down, and will post them sometime.
-Vampire glitch as in becoming one? or as looking like you got beat with an ugly stick after you are cured? Or as in not being able to cure it?

Uglier-than-Aunt-Mabel scenario: svcks, but you will have to deal with it.

Getting Vampirism in the first place: Not picking on you, but I just don't get it with all the complaining. After you deal with vampires, check your stats. It takes but maybe two to three seconds for me to open the interface, tab to Active Effects and check myself out. Carry a couple sprigs of Mandrake Root with you. If you enter a vampire lair, clear the whole lair, get the loot, check your stats, eat a root, done. And they weigh nearly nothing. I tried being one for a while, not my cup of tea, but I'm trying to figure out a background story in RP for a full on play.

Curing Vampirism: This was fixed for me on 360, when I upgraded from regular Oblivion to the GOTY. I literally ripped the cellophane off with my teeth, jammed the GOTY in the drive, loaded up my main character, walked into this person's house and cured it right there. First thing I did. Then I joined the Fighter's Guild on a new character so I could actually experience that quest line.

Bottom line: Don't wait until you have to cure it. Be aware of it and prepare for it.

What I meant was is it like fallout 3 where some dlc is where you go and can't come back until it's totally finished.
Also what I meant by adding anything is does the dlc add any armor, house etc. now I know it does not on the ps3.

It doesn't matter if you're on the PC, Xbox, or PS3, the DLC all adds the same stuff. All the DLC packs, except Horse Armor, add armor. Most of them add a house of some sort.

Let's get our answers straight here. If you're purchasing the GOTY, it contains the original game, Plus Shivering Isles and Knights of the Nine. It does not contain any other DLC.

Once they are installed, these expansions work seamlessly with Oblivion. You'll hear a rumor (and get a new dialog topic) about the Prophet in Anvil. You'll also hear about a strange island in the lake east of Bravil, and you can go there to start the SI quest line. You're not locked out of returning to Cyrodiil (except during some short phases of those new quest lines.)

The PS3 GOTY has a bug in the Vampire Cure quest. Simply don't allow yourself to become a vampire, if you don't want to stay a vampire, because the workaround for the bug is fairly awful.

I think Renee should be consulted here