it should run it, but badly , I have played it on a 6600 GT 128 which is slightly faster and had to play it on min settnigs to get good playable FPS.
Personally I would not bother with Oblivion unless you havea decent setup, I love the game on my machine because the graphics and feel of the game are superb, on the machine with the 6600 GT card it lost alot of its atmosphere.
AMD 4200+ X2 OC 2.3Ghz
Club Nvidia 7800 GTX 256megs OC 540/1350
Asus A832n Delux MB
40 gig WD Raptor
300 gig WD Sata 2
3dmark2005 = 8652