Note: If you are running Oblivion on Windows XP Media Center Edition or Windows Vista, and an infrared remote receiver is plugged in (note that many laptops have this built in), your console may not function properly. In order to restore its functionality, unplug the receiver for your Media Center Remote (or if it's built in use the device manager to uninstall "ITECIR Infrared Receiver" from "Human Interface Devices". This will allow you to use the console, as the receiver interferes with Oblivion's programming. Additionally, a built-in infrared receiver on laptops can cause the same issue and disabling it in the Device Manager has proven to fix the console function. Alternatively, a Ring of Console mod has been created to circumvent this problem.
I havent tryed the Ring of console mod. But the unistalling of the ITECIR works
I have also found a couple of mods that for some reason disable the Console. I am still looking to see exactly which ones it is, but when I have several of my mods activated at once, the console stops working. When I cut the mods off, it suddenly works again. Through trail and error, I will find out which mod it is and post so everyone will know.
Hopefully this will help those of you who are playing oblivion on a desktop rig, with vista as your os.this procedure worked for me, go to your control panel and go to device manager and look under the HID section and look for the device that has 'infrared' in the name, delete the drivers. then open the oblivion.ini file make a backup of that file just in case(on my game it was listed as oblivion_default followed by config settings thats the file you must edit), on my rig i had to drag the oblivion.ini file to my desktop to edit and save it. scroll down to the 'interface' section once you have opened the ini file and at the bottom of that section add the following line: bAllowConsole=1 save file and move it from desktop back to the oblivion folder, then run the game. You may not need to add that line to your ini file,but if you are running vista you must remove the driver for that infrared device. i've researched this on the web and no one really knows why that infrared device interfers with the tilde key for those of us playing oblivion under vista. hope this helps, it worked for me