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Then make sure you extract the OBSE files into your Oblivion folder and not the data folder.
I tried updating my DirectX 9 components but this didn't seem to make a difference.
Also, starting the game was possible with the dll from Obse V17.
Unless you repackage the mods you download, so that they are structured in a way NMM understands, NMM is not compatible with a lot of Oblivion mods.
Installing DarNified UI with Oblivion Mod Manager is ideal.
I use OBMM to install only two mods, DarNified UI and Nighteye Shader Replacement. I use OBMM because DarNified requires to much effort to install manually.
Another reason you should use OBMM, is to activate Archive Invalidation, which may be why Blockhead is not working correctly.
I used the OBMM and got Darnefied UI working through it, it also seems that I used to use the OBMM but for some reason I switched over to the NMM at some point in the past.
I'll try reinstalling the whole Blockhead thing again from the start: Obse > Blockhead > OCO
and see if that works.
So it was most likely a mod that was casuing compatibility issues, which one that is I don't know (yet) though.
things you CANNOT run together with OCO:
-Hair/eye packs that affect vanilla races
-Any mods that affect vanilla NPCs
-Mods that change racial stats
Blockhead works fine