From the Oblivion FAQ:
Input Problems
Keyboard input problems could be the result of a control peripheral. Editting the Oblivion.ini may correct this issue. The Oblivion.ini file is located in the My DocumentsMy GamesOblivion directory. In the [Controls] section, change the bUse Joystick=1 setting to bUse Joystick=0 or simply disconnect the peripheral. Make sure the settings are saved. Note, changes to the Oblivion.ini file will not be saved if Oblivion in running when the changes are made.
Frequent Crashing possibly due to old system file
Some users may experience frequent crashing due to an older system file. These crashes may be attributed to the ‘mpeg2dmx.ax’ file. Simply renaming the file to “mpeg2dmx.ax.old” may correct this issue.
Frequent Crashing possibly due to connected HP printer
A program related to HP printers may cause Oblivion to crash.
Before running Oblivion: Press Ctr-Alt-Del to bring up the task manager. Go to the Processes Tab. Right click on any process starting with the letters HP and select End.
Running Oblivion at this point may have this issue corrected.
Note: The PC will need to be restarted to reinitialize printing or imaging.
I verified that I do not have either of the first two issues, but I do have an HP printer. I’ll try disabling that and see what happens.
Update: *doh*. I just found an mpeg2dmx.ax in an old DVD XCopy directory. I’m going to rename it and see if that helps; killing the HP driver threads did not.
As of a total of about 2 hours of play time… mpeg2dmx.ax seemed to be my problem. Of course I need to play further to test this. And it did not fix the crash on exit bug.
Another comment… if you find you are to close to the NPCs when chatting with them..
try this fix from http://dubiousquality.blogspot.com/
DQ reader Fredrik Skarstedt solved my only complaint with Oblivion (the nasty, closely zoomed-in faces during dialogue exchanges). Here’s the fix:
In My Documents / My Games / Oblivion youll find the oblivion.ini file. Do a search for fDlgFocus=2.1000. Raise this value to pull the camera back during conversations. I set it to 4 and its a LOT better.
I set it to 5 and it’s a huge improvement. And I’ve got some good stories for you tomorrow.
After the mpeg2dmx.ax fix, I’ve been completely stable for an hour. That’s *way* better than I did before, so if it stays at that rate, I’ll keep playing. I’m going to have to try the focus fix too.
That’s it! I just played for 5 hours straight with no crashes. Woot! Now if I can just figure out how to join the mages guild.