Oblivion leveling system is simple you level your major skills to level up. The type of skill you level will result in the attributes you can improve.

This website is the most effective guide to the game: (below) to find it just google "oblivion wiki".

http://www.uesp.net/wiki/Special:Search?search=leveling+system&go=Go&nsnum=116&redirs=1&searchtitles=1

I suggest leveling strength skills to max even if they are minor to enable more health and weight carrying. But the quest your doing Nocturnal's quest. where you recover here eye be prepared to fight trolls at least 5 of them.

Oblivion was one of the more perfect RPGs besides the natural graphics improvement: I would like improved physics, the world to be more like fallout (actions reflect enviroment and open field areas.) And online arena mode would be awesome. And cooler fight sequences maybe even finishers. Maybe NPCs and pets with more freedom. If that was encompassed you would have a flawless rpg. It would be combining Fable 2 aspects with Fallout 3 aspects and it would create awesomeness.