The Skeleton Key in Oblivion is obtained by completing the Daedric quest called "Nocturnal." To start this quest, you must be at least level 10 and visit the Shrine of Nocturnal, which is located just north or northeast of Leyawiin in the southern part of Cyrodiil near the coast
. Here is the step-by-step process to get the Skeleton Key:
- Go to the Shrine of Nocturnal and interact with the statue to begin the quest.
- You will be tasked with recovering the stolen Eye of Nocturnal.
- Head to Leyawiin and investigate the theft by talking to two Argonian suspects, Weebam-Na and Bejeen, who live in a house in the center or eastern central part of the town.
- The Argonians will deny involvement, so you must eavesdrop on their conversation by sneaking or using invisibility spells.
- From their conversation, learn that the Eye of Nocturnal is hidden in Tidewater Cave, located southeast or south of Leyawiin along the coastline.
- Enter Tidewater Cave, navigate through it (following the left wall), and find the underwater alcove containing the Eye of Nocturnal.
- Retrieve the Eye and return it to the Shrine of Nocturnal.
- Upon returning and interacting with the shrine, you will be rewarded with the Skeleton Key, an unbreakable lockpick that also grants a permanent +40 boost to your Security skill
In summary, the Skeleton Key is not found in a single location but is a reward for completing the Nocturnal quest, which starts at the Shrine of Nocturnal near Leyawiin and involves retrieving the Eye of Nocturnal from Tidewater Cave