SureAI

I've just downloaded and installed Nehrim, deselected all data files not pertaining to Nehrim and run the game. However all the menus are white blocks, the mouse curser is a white block and the character creation screen is just purple (like textures are missing) with the text on it.

Does anyone know how to fix this? My best guess is that it might be something to do with my Oblivion.ini file being changed by Darnified UI before installing Nehrim.

You can always delete your Oblivion.ini - the game will recreate it from scratch at the next start.

I've tried that and reinstallation but still have the same problem.

Have you also tried Oblivion reinstallation? Your mods may have altered the BSA files, and in that can Nehrim can't work properly.
Finally have you been doing something with the "Oblivion - misc.bsa" file, such as copying it from the Oblivion directory into the Nehrim directory? This is a bad idea.