You can probably run Oblivion just fine with XP, although Windows 7 would be a slightly better choice. You don't need to spend very much to be able to run it with mods on high settings. $700-900 should get you what you're looking for. http://www.newegg.com/Product/Product.aspx?Item=N82E16834215245 This is my laptop, I am able to run Oblivion on the highest settings, although I do experience large FPS drops when using mods like Unique Landscapes or Elsweyr: Deserts of Anequina (more like FPS spikes I suppose, they do get quite annoying). So it might be worth putting in a few hundred dollars more and getting a better one. What's your price range? Also, sorry... I don't know the conversion rate between Canadian money and USD so the prices I've mentioned may be a bit off.
You don't need a very good computer at all just to play Oblivion on high with only a few mods. If you don't plan on using mods like Unique Landscapes (absolutely amazing mod, I highly recommend it to everyone) then maybe $500-600 would be fine.