Let me start with an explanation of my problem, followed by my PC specs and my load/omod list so that you guys will have an understanding of what I'm looking at.
I have ran Oblivion @ 1680x1050 with nearly all of the sliders maxed out (except item draw because I really don't need to see items from halfway across the world), HDR, and no AA/AF enabled. I had no problems whatsoever running around outdoors (I'm not sure what the FPS was, I didn't find out about the console command tdt until recently) and indoors was relatively breezy as well. Having had my game crash (due to my stupidity installing multiple mods without testing them prior) and getting reinstalled, I've started experiencing periods of pretty dramatic FPS drops. The drop is most noticeable when entering Apachii's Goddess Store. Previously, I would only get a noticeable FPS drop upstairs when I would look in Hecate's direction, but now as soon as I enter the store I'm getting 2-6 FPS which is unbearable. I'm also experiencing periods of lag, like in front of the waterfront shack looking around, when I look towards the walls of the waterfront (towards the IC).
I have defragmented, I have pared any applications/processes running in the background to the bare minimums, I have downloaded and installed Operation Optimizer, I have even tried reducing the resolution I play the game at to a non-widescreen resolution [something like 1280x900 or some such nonsense] and still the drop down to 2-6 FPS when I enter Apachii's store. I have downloaded but not installed quietfeet because I don't think sound is my problem (due to my sound not being onboard). I followed the TweakGuides .INI suggestions [AFTER the lag started, not prior to] and made some changes but they made no noticeable improvement. I tried searching through the forums but I can't seem to find anyone with an identical issue, most problems being older hardware.

CPU: AMD X2 5200 2.6GHz (I have enabled the multi-threading utilization via the tweakguides .INI tutorial to try to pick performance up) [Temp 33C idle]
Mobo: Asus M2N32 SLi Deluxe
RAM: 2GB Crucial Ballistix DDR2-800 (PC 6400)
Video: eVGA Geforce 9800 GTX 512MB @ 1680x1050 [Temp 63C idle]
HDD1: WD 160gb 7200 @ 8mb cache [OS + Program drive]
HDD2: WD 320gb 7200 @ 16mb cache [Media drive]
HDD3: WD 320gb 7200 @ 16mb cache [Game backup/storage]
Sound: Creative Labs X-Fi XtremeGamer

Installed mods (Exported OMOD report via OBMM):
Oblivion.esm
Natural Interiors.esm
Unofficial Oblivion Patch.esp
Unofficial Shivering Isles Patch.esp
DLCShiveringIsles.esp
Oscuro's_Oblivion_Overhaul.esp
ArmoryLab.esp
gardening.esp
Beautiful People.esp
_Ren_BeautyPack_full.esp
_Ren_BeautyPack_onlyhairs.esp
StockClothingArmor-forExnems.esp
MaleBodyReplacerV3.esp
Book Jackets Oblivion.esp
Unlimited Amulets and Rings - Shivering Isles.esp
Apachii_Goddess_Store.esp
Natural_Habitat_by_Max_Tael.esp
Natural_Vegetation_by_Max_Tael.esp
Natural_Weather_HDR_by_Max_Tael.esp
Harvest [Flora].esp
Harvest [Flora] - Shivering Isles.esp
Harvest[Containers].esp
AliveWaters.esp
AliveWaters - Koi Addon.esp
AliveWaters - Slaughterfish Addon.esp
HouseMapMarkersOnlyBought.esp
ImmersiveHealthIndication.esp
IlluminationWithin.esp
Oonas_Outfitters.esp
personality_idles4.esp
talkwithyourhands PI4.esp
Reznod_Mannequin.esp
BlackLuster.esp
Nightshade_Armor.esp
Reznod_Mannequin_HD[Eng].esp
Lost Paladins of the Divines.esp
phinix-waterfix.esp
RhiannaII.esp
No psychic guards v1.2.esp
Speedy Disrobe OBSE.esp
ArmoryLab better armory.esp
Natural Interiors - Cities.esp

As an additional note, I tried disabling Natural Interiors (since I suspected that perhaps it was overwhelming but... that made no improvement)

If I left anything crucial to troubleshooting out, please let me know and I'll post it ASAP.

I also changed the pre-render option via Nvidia's Control Panel (from 3 to 2) and that made no visual improvement either.

yea i had the same problem, the apachi store is a major FPS killer

its the poly count on the clothes they wear
weirdly enough, using a disrobe spell on the goddesses increased my FPS
so give that a try

Thanks for the tip, however I'd prefer that they remain clothed =] I did see that it appears to be an issue with lighting, I went into Dzonot (sp?) cave and was attacked by the women in there who had some sort of lighting enchantment on them which dropped my framerate down pretty badly, much like in the Apachii store. I may pick up an additional 2gb of RAM and a 3.2ghz processor as well, still debating on that since it would be roughly $250..

I have SensorsView running which was monitoring my CPU/RAM usage while I was playing (as well as my temps) and my memory usage peaked around 100% so that's why I'm considering more RAM. However, I'd like to think that there is a technical reason, rather than a technological culprit.

just ordered 2 additional gb of RAM, should be here by monday I suspect. Maybe that will help things along, if it doesn't, I'll get an AMD x2 6400.. if that doesn't help, there's another problem going on here.

If the problem is slow framerate due to too many polygons being on screen, for instance if doing what was suggested improves performance, then the only way to solve it would be upgrading your videocard. more system ram and faster processor won't help you in the slightest in this regard.

You may even want to try changing some of the video options, like turning off window/water reflections, using simple shadows, or the like.

This is not right, with your computer specs oblivion should be running like a charm. First things first, what defragmenter program did you use? Hopefully not microsoft's. Plus, that's a top of the line graphics card you got in there, you can't really get a better one (maybe a second one but that's overkill.) Get Auslogic's Disk Defrag. It's free, and more importantly, it works.

Check for viruses. For the love of Oblivion, check for viruses. And if it comes up with nothing, see if any other games are experiencing severe fps drops. If they are, it could be a Drivers issue. Make sure you got the lastest Nvidia drivers for that video card. If that doesn't help it could be the hardware. A quick check is to run a performance scan (if you are using vista.) If it shows no score for your video card, it might be either the drivers malfunctioning, or just a bad card (hopefully not.) I doubt the card is out of place though, or the game probably wouldn't play at all.

Thanks, I had some strong doubts that it was my video card since this isn't a consistent problem. Things seem to "burst" where it's smooth again (ie, I went through a short period where I was getting ~20 fps in Apachii's store and completely buttery outside ~40-60) but then it would bog back down, and I'm not running ANYTHING else [except spybot S&D]. In addition, changing my resolution (lower) made no positive impact, which leads me to believe it's not my video card. I've just downloaded that Auslogics defrag program and will give my system a scan with AVG to make sure there's nothing nefarious causing the problem. Oblivion is really the only game I play these days, so I can't really check against any others. My drivers are up to date so I'm not sure where else the issue could be coming from.
I finished scanning with Auslogics and my drive was only .09% fragmented prior to running the scan. I'm going to run a copy of their boost speed software to see if that helps anything, although I suspect it's just a scam to try to get me to buy it [which I'm not going to do]. The program is having a field day with my "disk cleanup" so my suspicion that it's a HD issue may be validated. We'll see. I'm also considering offloading the game onto a HD that's not my OS drive since it's accessed for everything else, having it on a drive that doesn't see much activity could help. But I don't really want to do that since that means reinstalling all of the damn mods and that's a miserable process.

AVG found no viral threats, Spybot S&D found no threats. Auslogics' Disk Cleanup/Defrag both cleared things up a bit [some 5200 issues resolved with the cleanup, as noted above only .09% fragmented prior to running it]. I did check my drivers again and there was an update so I'm going to be updating my drivers shortly. I'll post if there's any resolution to the issue.

Drivers updated to 175.19. I thought there was a noticeable change in the gameplay when I loaded my save everything was running smoothly with some occasional hiccups (equated to a 10fps drop). Once I got back to the waterfront, FPS death again resulted. I think it's my HD and I'm now very tempted to move the game to a lesser accessed/non-primary drive even though it would be a very lengthy process.

I just installed the additional 2gb of ram that I bought, no help. I changed my lighting settings from HDR+Bloom to just HDR or just Bloom and no improvement. I disabled file indexing on the harddrive and there was a noticeable improvement. I may have found the culprit. I don't have time to do further testing, but I've got my fingers crossed that this is it!

Problem still persistent, things ran beautifully in Dzonot cave even when the Amazon women started with their light/chameleon enchantments which gave me hope. Then I left the cave and it was back to FPS-rape. I don't vulking understand what the hell the problem is. This is seriously pissing me off.

Have you tried disabling most of your other mods? Go ahead and disable all and start a new character. Set it to god mode (console TGM) to speed things up as this is just a test. Go to the areas where you have the problem and try it. then save just outside of the area and add in some mods - not many, and try it again. If it is not a mod this will tell you right away. If it is a mod it should show up and you will be able to track it down.

Once you have identified the problem, try it again with all of the other mods. Then go back to your last saved game with your main character and try it.

Yeah, I'm actually already in the process of doing a complete reinstall. I've installed Oblivion, SI, UOP, USIP, and OBMM.. Going to start from scratch =[ There are a couple of places that I experience the most drop, the one I noticed first was entering Apachii's Goddess Store, and immediately upon exiting looking upon the "docks" and towards the IC, another is when I'm in front of the waterfront shack and I look towards the walls of the waterfront (again toward the IC) and when I exited Dzonot cave it was murder all over again. But thanks for the tip as far as racing through the intro, I'll do that.

Having done that (only installed O, SI, UOP, USIP, OOO (1.3 + .31 + .32 + .33 patches)) I go from 60FPS in the sewers to ~40FPS outdoors with periodic stutter down as low as 2FPS [no ini tweaks done yet] and again looking at the IC waterfront, in and around it, I drop from 30FPS to ~15. Is this normal for anyone else?

Out door areas usually run a bit clower than interiors. The tutorial dungeon isn't really a good benchmark since almost everything in there was made at earlier stages of the game, so most of the lighting and detail wasn't really in place. A decent test would be somwehere like Chorrol or Bravil.

Try making some changes to graphics options. Turning off shadows, grass, or using simple reflections can make a world of difference. If you MUST have grass, there are a few mods out there that lower the density and the size. Grass and water reflections might just be what is killing your framerate out at the waterfront.

I must be something badly wrong. I get better fps than that in most areas and I'm running a GeForce 7600 gs, which is, by today's standards, crap. I have 1GB Ram, and a crappy processor, so I can't understand how a PC with a 9800 series and 4GB Ram cannot run OB when it can play crysis on high settings with good fps. (Around 60)

Very interesting thread . My take on this one would be that 1st - The whole area surrounding waterfront has a bad FPS and 2nd- @ Talos II- Oblivion is STILL a buggy game compare to everything else; in my opinion this wonderful idea of a game wasn't optimize for PC at the very beginning. It's my forth time playing this game and without some of the greatest mode made it by (isn't funny???) people outside Betsheda that won't be another '' I will play it again '' feeling like I have with other games.

60 FPS in dungeons in general, but specifically I said the sewers because that was the beginning of my testing.

Vagrant, I appreciate your suggestions, however there is no apparent explanation as to why my system hardware isn't maxing this game out. I realize it is a resource hog, but that doesn't explain the substantial drops in framerate that I get when I have 4gb of good ram, a decent processor, and one of the newest(ish) video cards out that surpasses the 8800GTX (and in some circumstances the Ultras). I will test in Chorrol and Bravil both as soon as I get there (I, unfortunately, enabled the map-marker option of OOO that removes all map markers except IC for fast-travel).

This is very frustrating.

Yes, it may not make sense, but you need to cover all the bases. If it works, it means we're on the right track, if it doesn't, it means that there is some other issue. Oblivion is one of those games which works well for some and gives constant problems for others. And much of this variance is due to both the game itself (some video cards handle things (like shaders, vertex colors, transparency, HDR lighting, grass and trees and so on...) better than others), as well as what mods people have. Would you rather I suggested that you delete everything in your data folder, do another reinstall, update to only the 1.1 patch, and don't use OOO, SI, or any of the unofficial patches in order to get a true baseline? For all we know, it could be that terrain noise on distant landscapes that was added in 1.2 and SI that is causing the problem. Or just the changes which were part of OOO. Or something which one of the unofficial patches changes. No, instead I suggested changes which would be fairly easy to test, and may still yield some results.

Point accepted. I'll try your suggestions even though I have my doubts. Particularly since there is little to no grass in the view of the IC from the IC waterfront shack [where FPS drops to ~15-16 from 30+] In addition, the simple reflections probably (I'm making a presumption, don't hold me to it) won't make a difference because the lag I experience in this particular area has no water either [neither the IC Shack-view of the waterfront or the Apachii goddess store]. I have reasons to suspect other culprits because changing resolutions [as low as 640x480 using a fresh .INI file] made no significant difference