Right now I have a combined total of 119 .esp and .esm files in all on my 1 single Modded Oblivion install! So that means I fear I am now approaching the limit the engine will allow as far as .esm and .esp files are concerned! So what is the exact limit? Mind you, even at 119 files total (.esm and .esp), my game still runs fine! So what is the exact maximum number of .esp and .esm files one can have before stuff gets overloaded/bad?

The limit is 255 esp/esm. And this does include the base ones too, like Oblivion.esm

But it's very easy to get overloaded and have bad things happen well before you reach that point.