Will I get the full Oblivion experience with this hardware?

Don't know about max with a x1600, but it should be close. I play at high settings with an x800xt.

I agree with everyone so far but I would also Like to add that this game does not need to be on ihgh settings to be enjoyed. The system you see blow in my sig. is still in progress. I have up until now played on my laptop with an x300 on lowest settings and everything turned off. The results: Im totally hooked. This game is great because of the richness and depth of gameplay. Needless to say, however, I'm pretty excited to jack up the setting and player it, as you say, "the way it was meant to be played" once my system is done.