This is a quest from a post by Suburban from another post:

After Clavicus Vile has asked you to give him the sword, the game will crash, whether you opt to return it to him or keep it for yourself. The glitch is related to the dog statue that appears in your inventory after you receive the quest, through which the Hound of Clavicus Vile speaks to you and tries to convince you not to complete the quest.

It just seemed that I load a saved game, wherever I was, walk for about 2 seconds, and wherever I was, the game would freeze. But I fixed it by quickly fast travelling from city to city, and the statue went from my inventory.

I am running into the same problem and its very annoying since I really was hoping to do all the quests in the game. Does the fast travelling thing work on the XBOX 360 version of the game as well. Or, is there another way to finish this quest? It won't let me drop, sell or store the silly little dog statue, which is also very annoying.

Any and all help will be greatly appreciated.

P.S. This is my first time playing this game. That's why I want to do all the quests in the game.

I assume you don't have live since a patch was made available for the xbox version that fixed this and other bugs. The work-around you mentioned (or something similar, haven't played xbox Oblivion for 2 years) worked for me but the patch later made it unnecessary.

There is another way to finish the quest. You can kill Umbra before the quest and take the sword then when you reach the required level for the quest (I think it LV 20) You can just talk to Clavicus Vile and you can decide if you want to give back the sword (Terrible move in my opinion) or you can keep the sword. Either way you finish the quest without having to deal with that glitch

I am also on 360, and am not connected to LIVE, as frankly, that is too much temptation for game crack. I have not experienced this problem, I have the GOTY. Reload a save? Go back and kill Umbra first, as The Terror of Death has pointed out.

The only proviso for this method is killing Umbra before the quest is murder. So if this doesn't fit your role-playing, one of the other methods would have to be used.

Thanks for all the help folks, I finally finished the quest and from now on I'll do the kill Umbra in advance thing. The fast travel from city to city thing worked sort of of but I would still lock up.

What I finally had to do to get past this glitch was to temporarily hook my XBOX up to the live part and do that part of the quest while playing live. Then save the game once the quest was completed.

I am purposely not hooking up the XBOX live to stave off the download temptation saving me lots of money lol.

Thanks again!