Oblivion Skipping frames/Lags why?

Ok The Elder Scrolls Oblivion skips frames on my computer when ever creatures jump (mostly rats) or if i move and some other object moves. I average about 120-200FPS and when i see the rats jump it drop about 25 frames every jump untill i am about 30fps and it still skips frames, this is the same with lowest settings and high settings. The disk is in perfect condition. I dont load the newest updates for my Video Card. I dont have any Mods at all. i reinstalled windows (updated to SP3) and physically reinstalled my video card just in case it was loose and here are my specs

Quad Core Q6600
512MB DDR3 ATI 3650
2GB DDR2 800
500GB HD 7200

I am not sure what to do...ok i just updated Oblivion and it didnt help

Any ideas?

Its just a really badly optimized game. My old rig played it decently and my new rig doesnt do much better even with only a few things higher. Its the engine itself.

For you your GPU is a little weak.

Oh i forgot to mention , DoN't ever play oblivion on a laptop.
Checking out the forums there are tons of people literaly burning their laptop / videocards because the game is just too heavy and laptops have lousy cooling systems , and umm you dont wanna know the price for laptop hardware replacements eh