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I am also running on steam and I got it to work successfully. What is did is the following:

1. Backed up my heavily modded Oblivion data folder
2. Restored my vanilla Oblivion data folder (I had a copy on my hard drive).
3. Ran Nehrim installer with default options.
4. I did NOT delete my oblivion ...

I agree. I've also been playing for about two hours and everything is top quality. The translation is very good too, great work.

I've only played for about two hours and so far it is amazing. Can't wait to see what the rest will be like. The view from outside the starter mine was spectacular.