Somehow, a guard noticed that I'd picked a lock inside the house and arrested me.

Guards are psychic like that in vanilla Oblivion. Make sure no one is detecting you while you're picking the lock, i.e. make sure your sneak crosshair isn't lit up.

The guards seem to be able to spontaniously and mysteriously know when your up to no good sometimes. There's likely is a practical reason, it's just probably just hard to see. Were you seen picking the lock to get in the house in the first place? If so maybe a guard followed you into the house where he arrested you right after picking a lock. Another possiblity is that the house could have also been off limits. If so a passing guard could have noticed you trespassing and followed you in to tell you off. Trespassing isn't usually an arrestable offense but it will get people's attention.

Possibly. The guards were walking the other way, but I don't know if that matters in Oblivion.

For some reason this has never happened with me, might be that I'm always in sneak mode then doing illegal things, this way I see if people are watching. Yes has been caught many times but not in the empty room setting, mostly because a guard turn in my direction or someone enter and caught you in the act.

Yes the guards have psychic powers then it come to murder or attacking other guards. Think they are able to report you even if you single hit to kill them and knowing it was you even with chameleon 100.

I am chameleon 105% and have no trouble . I can pick locks in front of anyone without being seen but because I am somewhat paranoid I always save just before I began and check for bounty just after .

I do the save and check almost every time! Hate bounty!

:rofl:

I just pictured what it would be like if someone saw this topic in some other forum..

Guards unfortunately have a very high Sneak Skill and they have an invisible range factor where if you commit a crime within that range they will chase you to the ends of Oblivion "Stop you have violated the law I don't care if I'm standing in lava, pay the fine or go to jail". Basically what you need to do is stand still or use an Alteration spell that unlocks the door or use an Invisibility spell.

:lmao: I think I had a run-in with that very same guard.