Looking at the naming scheme with the upper Niben in the north, the lower Niben in the south, I'd say the Niben flows south into Topal bay :unsure:
Indeed, and judging from the geography of it, that seems to make sense, of course this is not reflected in the game, but that's just because aside from water falls and the like (Which are, in terms of how they are done in game, not actually water.) Oblivion doesn't model flowing water. For rivers that do flow north, as in the information given from the Wikipedia quote in this thread, rivers always flow downhill, when that is north, they will naturally flow in that direction.
As for rivers seeming to spring from nowhere, that, I believe, is owed to unrealism of the game's geography rather than anything in lore.