In Oblivion, the menus are loading fine, and I can watch the intro movie, but as soon as the movie is done...?

I come up to the character creation screen... The menu for creating the character is there, but the character model isn't, all I see is a blue background. And if I hit create character, I still have a blue background, nothing is seen except the blue, and my hud. I can enter my menus and walk around, but I don't see anything, where I am walking, etc.

I have more than enough system resources to play this game, do I need to run it in compatibility mode for XP? Or is there something else wrong?

ASUS Maximus II Formula motherboard

ASUS Radeon HD 4870 1GB VRAM

Corsair Dominator 2x2GB RAM

850 WATT Power Supply

Intel Core 2 Duo

Intel® Core™2 Quad Processor Q9550 (12M Cache, 2.83 GHz, 1333 MHz FSB) (4 cores)

Thanks in advance!