Crap I wrote all this without seeing that the guy already came to the exact conclusion. At least now u can all laugh at my story, and how i dont get to play oblivion any time soon.
OK OK! EVERYBODY!
I believe i have the solution, since i have the EXACT same problem. I went to some of my friends and they ran it thru some machines and got some numbers, and said that the motherboard is fried. Luckily i got the warranty. I do not know exactly how it happned, but i wear a coat which sometimes resonates a static shock from my fingers when i take it off. Now, i turned my pc off beforehand (pulled it out of the plug), and i tried to switch the power on without plugging in the plug. The static shock was extremley (!) big this time, and because the motherboard wasnt getting a static amt of electricity, this short (in comparison) amt of electricity caused it to go bonkers. To make sure its the mobo, check ur processor, make sure it aint friend (or anything of the like) smells ok, and if beeps are coming out when u load it up). Pretty sure u need to replace ur mobo buddy
Im upset myself, wanted to play oblivion on this baby, but poop happens.