X800XL & Oblivion Issue: GPU not under load HELP!!!!

Hello there. Recently I've experienced issues in Oblivion. I think the cause is my video card. Even at 640 x 480 windowed mode Oblivion runs very choppy, outdoors 10-15 FPS and indoors no more than 30FPS. Other games had no unstable graphic problems. The settings are:

ATI Catalyst:
Bitmap detail at high performance, AF & AA at application managed, adaptive AA off, vertical refresh off.

Game:
texture size @ large
tree, actor, item, object fade @ MINIMAL
grass distance, view distance @ full
distant land, building, trees @ ON
int.shadows @ 35% approx.
ext.shadows @ full
self shadows, shadows on grass, tree canopy shadows, shadow filtering @ OFF
specular dist @ full
HDR off
Bloom ON
water detail @ high
water reflections, ripples, window reflections @ ON
blood decals @ High
AA @ OFF

Before, I had my settings better than this (1280 x 1024, 6xAA 16xAF, all fade @ max) ,and I can still play at bearable framerates e.g 20-30FPS outdoors 40+ FPS indoors, for a few continous hours without any instability. Recently the game became "unstable" in terms of graphics. The framerate shifts a lot. Often I did not hear GPU fan rotating at full blast, so this might mean that the GPU wasn't processing at all, when OBlivion was running!and framerate at this time was usually only 5-6FPS. When I started to hear the loud noise of the GPU fan the framerate went to the stable condition, but still couldn't maintain at the stable condition. And the worst is when I'm at F4 screen ( quest screen) the framerate is like 5-8 FPS it makes me unable to even scroll the map! The GPU is 45C idle but gets as hot as 68C within 1 min of load.

I suspect that my video card *may* be defective, causing the GPU to not work peroperly, hence the fan not rotating at full blast when gaming. OR my PSU is not enough to power the GPU to run at full load. OR my o/c made Oblivion unstable. Of the three possibilities I suspect that one is the cause, but I don't really know so I need some help!

My specs:

E6300 @ 3.01GHz, 1.26875V
GA-965P-DS3 BIOS F6
OCZ Gold XTC DDR2-800 5-5-5-12 2V @ 860MHz 5-6-6-15 2.1V
ATI Radeon X800 XL 256MB GDDR3 PCI-E 398/986 (stock)
Seagate Barracuda 7200.10 250GB 8MB 8.5MS ST3250820AS
Thermaltake Big Typhoon CL-P0114
OCZ Modstream 450W, single 26A, labelled 312W max 12V power
Coolermaster Centurion 5