" Old file not found. However, a file of the same name was found. No update done since file contents do not match."
I had the same issue and found that the reason it was unable to patch, was that I already had the right version installed.
-Check your Oblivion(right click- properties-version) and see what version you have. If it says v1.2.0416 your good to go.
That said, I struggle with the sameproblem as you, only I dont use steam and get the following error: "This application failed to start because d3dx9_27.dll was not found. Re-installing the application may fix this problem."
I have gone through all the 5 points in the readme.txt and made sure that everything is as it should(right oblivion version, removed .ini file, right game files activated, working and uncorrupt oblivion game, installed in a correct folder)