To answer your question, yes the x1900gt will work with your system. Just don't expect mid-high specs on Oblivion with it. Even if you had a C2D system, Oblivion brings computers to it's knees.
To get med-high specs on oblivion you need at least an E6600 with a 8800GTS card.
Only expect low level detail on Oblivion with the X1900GT. And it might have to be run at 1024x768 to be playable.
Thats not true, he'll be able to max it out at that resolution with HDR, but he should probably leave out AA and AF.