My Oblivion.ini in Documents/My Games installed like this:
http://i.imgur.com/E6Yv1.jpg

Is there anyway to fix this?

Have you tried a different text editor like Notepad++?

Also, try deleting it and letting the game regenerate it.

Also also, to see if it actually is just a display thing or something else, have you tried the game to see if things are working as they should?