Make sure water (shift +w) and objects (shift + c (I think)) (buildings, trees, rocks, subspaces, lights, markers, ect) as well as the CS light are off before generating textures. When the textures are generated, you'll need to fix their file names for any quads that are along the 0 axis. You'll find the textures in the "Oblivion\Data\Textures\LandscapeLOD\Generated" folder. The textures generated have a single 0 for one of their coordinates. What you need is to change that to be 00 or a double 0. So the filename 6493.-32.0.32.dds becomes 6493.-32.00.32.dds. The same may need to be done with the normal maps (notated by a _FN suffix). This will make sure the textures are being linked properly.