ok im cunfused, why would Kvatch Rebuilt even need a esm master file as OBLIVION is the only master file that is needed, right? i need this explaining i dont get it.
Oblivion is a master file, yes, but ESM is only a file type. Of course, there can be more than one. You'll notice that most ESMs (if not all?) depend on Oblivion.esm as well. It is the ultimate master file. Oblivion.esm is the only ESM required for the game to run, but mods' plugins may have multiple master files. ESMs can depend on other ESMs (in addition to Oblivion.esm) and ESPs can depend on both ESMs and other ESPs. Oblivion cannot run without its main masterfile, and mods cannot load properly without it or any other of their own master files. Missing master files cause CTDs on load (as you've already witnessed.) A missing Oblivion.esm will cause for Oblivion's process to launch errors at you, and the also cause the game to fail to load (albeit a much more dire situation.)
Load Ordering - http://tesivpositive.animolious.com/?page=load_order
TESCS Wki:De-Isolation Tutorial - http://cs.elderscrolls.com/constwiki/index.php/De-Isolation_Tutorial
TESCS Wiki:Master file - http://cs.elderscrolls.com/constwiki/index.php/Master_file
TESCS Wiki:ESM vs ESP - http://cs.elderscrolls.com/constwiki/index.php/Esp_vs._Esm
Edit: wording