Have never run into anything like this myself but did vaguely remember reading about it somewhere. Found this in the nVidea forums if you have a peripheral like a gamepad or joystick connected to your computer
Slow motion movement
The player character moves in slow motion, or heads in one direction without any buttons being pressed.
Warning I would strongly recomend making a back up copy of the Oblivion.ini file before making any changes to it
Solution: This is often the result of a joystick or controller plugged into the computer. Editting the Oblivion.ini may correct this issue. The Oblivion.ini file is located in the My Documents\My Games\Oblivion directory. In the [Controls] section, change the bUse Joystick=1 setting to bUse Joystick=0 or simply disconnect the peripheral. Make sure the settings are saved. Note, changes to the Oblivion.ini file will not be saved if Oblivion in running when the changes are made.