Obsidian seems to have done something wrong with regard to the hardware detection procedures that the game engine included for Oblivion and for Fallout 3. What it amounts to isn't certain, and it seems to affect several dozen times as many Gefrorce owners as Radeon owners. Both kinds of graphics cards are competitive with one another if you understand the naming and price points they meet at. Neither is inherently better or worse.
nVIDIA, however, has embarked on a path to a different future than AMD is free to pursue, and I think their processor's architechtural design is harder about its interactions with drivers and with Direct3D than is the case for AMD right now. They seem to be slipping and sliding all over the place with driver software that constantly gives Geforce card owners difficulties.
Not that AMD hasn't also been guilty of some bad driver releases, themselves. I have seen a couple of different vectors for the misidentification symptom to appear; one of those is a specific fix for recently produced Geforces that bog down very badly whenever several NPCs are in view at the same time. As best I understand these problems, only the Geforces "need" a copy of d3d9.dll copied into the game folder.
If the game works for you in spite of the misidentification, you are out ahead of many Geforce card owners. Tell us how the game actually works, OK?