Weapons and armor do not take any damage during fights.

Just copy NoDurability.esp into the Oblivion Data folder and be happy...

Spells like disintegrate weapon/armor still break your stuff.
Blocking still deducts the blocked damage from the weapons durability.

p.s.
There is another mod called 'better blocking' and if you set all the 'shatter' variables to 0.0 in the .ini file, the weapon/shield will not take any damage from blocks either.