Oblivion Games on Demand. Disc is Unreadable?! Seriously MS....

Okay, this sounds like a memory issue, and not an issue with the download itself. First off, can you try clearing the cache on your console after deleting the game, and then try it again? You can do so by following these steps:

Delete the content
System Settings > Memory > [select storage device] > Games > [select game] > [select content] > Delete

If the content is not in the above location, try looking in the Games folder for “Unknown Game”. Delete this and continue with the steps.

Clear system cache
System Settings > Memory > Highlight HDD, Press (Y) > Clear System Cache > Yes

Restart the system

Redownload from purchase history
Account Management > Download History > [select content] > Download Again

If that doesn't work, I'd be interested to try 1) formatting the HDD (in which case you'll want to back your save files up onto a USB device), or 2) trying the download with a different HDD (if a friend has one you can borrow) or a different console.

Please let me know how it goes!

im having the exact same issue. bought the disc and it didnt work so then i bought the marketplace version and it worked fine for a day. so i just did your steps and im now waiting for it to redownload.

Did not work.

Hey mate, what was the issue with the disc-version of the game? And you said the Marketplace version worked fine for 24 hours? What happened when it stopped working properly?

My suggestion at this point would be to try a USB device configured for use with Xbox 360. Try downloading the game to that USB device, to see if it allows you to play the game without issue.

I'm having the exact same problem with Oblivion. I downloaded it straight to my hard drive and it says that the disc is unreadable. Funny thing is, I had the same problem with Skyrim, The only difference was that I had the disc with Skyrim, which was flawless and unscratched. Both games give me the "disc unreadable" screen. On Skyrim when I try to load a game and Oblivion simply never even gets past the opening credits.

I tried installing Skyrim and re-downloading Oblivion, clearing my cache... It must be my xbox, since my other friend can run the disc easily.  I have a 360 slim.

Hey Light Speed, can you please clarify? You have the GonD version of Oblivion, correct? If so, have you ever had the disc copy of the game? As for Skyrim, have you tried all of the steps listed here?

Have you ever figured this out? I am having the same freaking trouble and I am dang sure not going to waste $30 just to download a game that doesn't work. I've tried every freaking step. Downloaded it 4 times already, deleted all files associated with it, called xbox twice. This is freaking ridiculous.

Hey Roc, to be sure, is this the Games on Demand version? I only ask because of that line you included about paying to download it. If so, does the same issue occur for different profiles on the console? You may want to create a free account to find out.

Mister F, It's definitely the games on demand version. I downloaded it 4 times, even called Capcom like support asked me. I will try playing it with a different account, but I already tried the license transfer thing and it hasn't worked either. I will let you know what happens.

Okay, please do keep me posted. :-)