You need a new hard drive.
I had the almost exact same problem at work (someone installed Oblivion on the engine parts computer) and after about 10mins of playing, the blue screen of death showed up. I had a look at the harddrive itself. Aside from the fact that it smelt like melted cheese in the computer, there was a huge scorch mark on the disk part.
We lost 52gbs of data that day.
Change your harddrive. Its faulty.