Yes Oblivion is in the oblivion directory. i used the Omod version. The sword, orb thingy and the spells do NOT have this weird effect. And finally Vanguard program is in Computer>OS(C:)>Program Files (x86)>Bethesda Softworks>Oblivion>Data and yes i use a 64 bit computer windows 7. Now that i notice the mod doesn't have the symbol like all my other mods in that folder it looks more like a blank program document with a lock on it.
A blank program document with a lock on it? Well that's puzzling... Almost as puzzling as the fact that only the armor is affected. Since all the armor parts use distinct .nif files, they should not conflict with any armor replacer/whatever mods you could have. And since the sword and orb are unaffected, that means you got everything installed properly.
Frankly, my competence with computers is rather restricted. I don't know if the fact that all the files in my mod were created in a standard windows XP dinosaur could cause conflict, but I'd be surprised to see that you're the only uploader with a 64 bit W7 config...
I'm afraid I can't be of much help, but if I were you, I'd start with uninstalling the OMod (Using OBMM, deactivate the mod, then right-click on it and hit ''delete''). It
could be possible that, during the downloading process, a mistake occurred. Try and see what happens if you re-download it and re-install it.
If the above method does not work, I suggest downloading the 7.zip file (you'll need 7-zip, of course - that's always a useful app) and creating your own OMod with it ( Unzip the file on, say, your desktop, and, Using OBMM, hit Create, then in the window, click ''Add folder''. Select the Vanguard of Oblivion/data folder in the unzipped file (be sure to have the ''data'' folder selected), then hit ''create Omod'').
Those are very ''generic'' techniques thought... I wouldn't be surprised to hear you already tried them but that's the best I can say. Frankly, besides a download error, I can't think of anything but an incompatibility between your platform and the platform on which the files were created, in which case I don't understand what the hell went wrong.
I wish you the best of luck!