Did you install STEAM, and therefor Oblivion, to the default directory of Program Files? If so that's likely your problem due to UAC. I suggest you reinstall to \STEAM\ or \Games\STEAM\ and that should resolve any permissions issues.
I use the STEAM version with OBSE 19b, and have used many other versions in the past, with zero problems.
Hmm, I'm not directly on the D drive. Think that's the problem eh? I'll give it a try... annoying though downloading the whole thing again is.
EDIT: ...lovely... now TES4LODGen can't find my files. There's no way in the program to manually set the file path in-so-far as I know.