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Barachiel: The launcher *launches*, but all the options but "ElderScrolls.com" are greyed out and unclickable.

I can run Oblivion.exe directly, but cannot run initial setup or customize things like resoltuion.

Any idea WTF is causing this? I've had Oblivion on Steam for years and I've never seen this issue before.
It's caused either by missing registry key that for some reason wasn't created, or by previous installation and thus a key that points to incorrect location.

You can fix this by manually adding / editing the registry key:
open regedit.exe

go to (64bit):
HKEY_LOCAL_MACHINE\Software\Wow6432Node\Bethesda Softworks\Oblivion

or (32bit)
HKEY_LOCAL_MACHINE\Software\Bethesda Softworks\Oblivion

creating new String value named Installed Path and putting your game root folder there.
I posted an example for Fallout here:
https://www.gog.com/forum/fallout_series/cant_change_graphic_settings_fallout_new_vegas_appears_to_not_be_installed/post4