Got it working. What I did was I made sure that AA was override in the control panel, then I deleted my Oblivion.ini file, ran oblivion, set everything to max, then followed the Tweakguides.com guide to tweak my ini. I must have accidently fiddled with a setting in the file before that disabled the AA.
The card was doing AA before, but i couldn't see the results, so now I have AA at no performance cost.
One final question.
At 1680x1050, what level of AA should I go for: 2x, 4x, 8x, 8xQ, 16x or 16xQ?