When I start oblivion launcher it says Video Hardware Unrecognized. What can't my Video Hardware be recognized? Last time I played Oblivion my video Hardware could be recognized. My graphic card is radeon HD 5850 Intel i7 processor

Well your GPU is newer then the game itself. It wont be recognized so it will default to medium. It does that for every card newer then the game. Just say ok, and then manually set the game to Ultra and then adjust any sliders in game.

How do i Set it to ultra settings and how come last time oblivion recognized the video hardware?

It probably didnt recognize it. It couldnt have, since the card isnt listed in the game's database of known cards. In the launcher, just go to Options>Video Quality Presets section> and select Ultra High settings.

I don't have the opinion to Choose Ultra High settings. Thats why I'm asking

what version of the game do you have, and are you using the launcher on the disk, or the one on your harddrive?

http://www.4shared.com/file/0DM-Kr8s/OblivionLauncher.html that has the presets - just launch the game using it and select Ultra High.