Try using a regular (non-enchanted) weapon. His reflect and absorption just means that if you use magic, you feed him. Dagger, up close and personal is nice, as you can get many whacks in. I personally use a claymore, as it is quite fun to watch your enemies go flying through the air when doing the expert power move with a claymore. If it's enchanted with fire, your enemies catch on fire... but I digress. Buff myself with shield if I'm a warrior, and spell absorption/reflect potions if I'm a mage. He should go down fairly easily with non-enchanted weapons. There is always the difficulty slider, which you can use mid-combat if you so choose.
Edit: My characters level up as the game intended. My new character is level 5, and can one-hit kill anything while sneaking with a bow. I just practice my killing skill. There is a huge debate about leveling in Oblivion, I don't power level myself, and every character I've fielded has been very successful in what I had hoped for them. I'd just play and level up as normal. The only reason you don't level in Oblivion, according to many people here, imho, is that you are not successfully practicing your kill skill, and need to learn the combat/game system better. Problems come with power gaming. It is quite easy to screw up your character by having him get weaker as you go higher in levels.
Some people don't level up, because it's a part of their roleplay (the availability of certain weapons and armor, for example)