I am playing the UK version of the GOTY. I notice that directly under the little island with the SI portal, under the water, there is this piece of land with a very blurry low res texture on it. It has no collision, and swimming through it will reveal the real floor that's meant to be under the water.

I tried disabling all plugins except oblivion.esm and this weird land is still there (and also a bunch of yellow excalamation marks at where the island is supposed to be ). Also tried landmagic, doesn't fix anything.

I have no mods installed. However, for screenshot purposes, the following was taken with the "Enhanced Waters HDMI" mod so that you can see it better without the murky water fog. The mod makes no difference - with or without, the glitch is still there.

http://imbx.us/Q5v.jpg <-- above
http://imbx.us/Qzb.jpg <-- below

Has anyone else experienced this?

That always happened on the Xbox (also the PC ofc) with me too. It's just a bug with the LOD land not disappearing properly with the SI plugin loaded.

Well, good to know I'm not the only one. Any known fixes?

I was hoping the Unofficial Shivering Isles patch (and the supplementals) fixes it, but it doesn't... Landmagic doesn't work either...

Why does it matter?

It's where they modified the land height when adding the plugin, and the LOD wasn't regenerated and hasn't gone away. You could in theory try to regenerate the LOD but it's not really worth the hassle.

Regenerate the LOD Landscape for quad 60.00.-32.32 and see if that helps.

Otherwise, since it's all underwater, it's easy to ignore this issue. So easy, in fact, that there's hardly any need to bother.

Which is, consequently, why the UOP/USIP will not be addressing this. Landscape LOD is fiddly enough without trying to fix this. I'm pretty sure this LOD issue exists whether SI is installed or not btw.

I've run into the same issue elsewhere underwater, and also around Fort Sutch. I'd just call it a randomly-occuring engine bug.