Oblivion fan with a problem

I love Oblivion and I want to be able to play it at its maximum settings and from what I have read, with my system specs I should be able to do that. I'm trying to run at max settings at 1920x1080 but frame rates vary from high teens to medium 20's constantly which is just too lagy to fully enjoy. However turning down the resolution to 1680x1050 (the resolution of my secondary monitor) frame rates remain fairly stable in the 30-40 range. This is great but I would still rather play the game to its potential at 1080p. My question to the community is, is this a problem that can easily be solved by a new, fairly priced graphics card, or is the problem in the processor. Also if anyone knows any settings which I can turn down that can help improve fps without sacrificing visuals please let me know (Maximum settings, for what I'm concerned, are all settings such as grass and tree canopy shadows at max, Bloom and at least 2x AA). All graphics card, cpu, and setting suggestions are greatly appreciated.

Here are my system specs...

Intel Core 2 Duo E4500 (2.2Ghz)
Nvidia 8800 GT
Dual Monitors (1920x1080 and 1680x1050)
500W PSU
Windows 7
Stock Dell Inspiron 530 motherboard
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  1. Hello Toscana;
    Have you seen the THG game forum's "Complete Oblivion Optimization Guide "?

    Have you set a budget for a video card upgrade? A HD 4850 (~$100) or HD 5770 (~$150) would be a nice upgrade over your 8800GT.
  2. your cpu is a bit outdated. It might be holding your card back somewhat.

    If you plan to upgrade your video card I would highly recommend adding a new CPU aswell
  3. Looks like it might be time for an upgrade all around your CPU is very outdated and your GPU is a tad on the old side. The 8800 GT is still a pretty decent GPU but coupled with your E4500 its just not cutting it.

    If you do upgrade your GPU do not get anything less then a 5770 anything less then that will not give much of a noticable difference. As for your CPU I would say go for an Athlon II or Phenom II x3 this way you could save yourself money by reusing your DDR2 RAM or depending on your motherboard maybe upgrade to a new Core 2 Quad something like a Q9400 would be a nice upgrade if your board allows it.
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