Blender/Oblivion Character Animation
It's easiest to edit character animation starting from an existing animation file, because then you won't have to worry that much about the bone priorities and text keys. So, select an animation file which moves approximately the same set of bones as the animation you have in mind.
Import characters/_male/skeletonbeast.nif (the animation will also work on non-beast characters, this is just to ensure your animations will work nicely for beast characters as well), and select a characters/_male kf file under "Keyframe File". Make sure "Import Animation" and "Import Skeleton Only + Parent Selected" are enabled.
If all goes well this should import the skeleton with the selected animation attached to it. Check the console for messages like
Importing animation for bone Bip01 R Toe0 WARNING: bspline animation data found, but bspline import not yet supported; data has been skipped
If that's the case, then the imported animation won't be complete for bone Bip01 R Toe0.
This screenshot should get you started:
You can edit the priority of the animation on a single bone (relative to other animations that may be active at a particular moment) by editing the number following "priority:" in the bone's Null constraint.
If you want to set priorities on a custom armature, you need to create a new null constraint and edit its name:
The Blender NIF scripts also bundle a script to set bone priorities on multiple bones at once:
The animation keys reside in the "Anim" text buffer (this feature will be moved to named timeline markers eventually). First select the text buffer view.
Then, select the buffer called "Anim". If there is no such buffer, select "ADD NEW" instead and name the new buffer "Anim".
The buffer has the following format:
Each line corresponds to a particular frame. Each line starts with the frame number, followed by a slash, and then followed by all text keys for this frame (usually there is only one text key per frame) separated by slashes. In the above example there are just two text keys: "start" at frame 1, and "end" at frame 9.
When you're done editing, export the animation by selecting Oblivion as game, and "Export animation only (.kf)". If it doesn't work in-game, check your animation in nifskope. For the default character animations this should not be necessary, but for anything else, it may be required to fix the target name and clamping in the NiControllerSequence block.