I don't know if "Unhittable" is a legitimate word but it is now lol!
I was doing the Fighter's guild quest where I had to kill Nerer Beneran in Sargon. I got there, killed loads of people including Nerer himself, and in the same part Nere was in, some unseen fighter (not even the blurred outline you get with chameleon) was attacking me in hand to hand. The taunts sounded like a female attacker. I could not hit it, whether by swinging in front of me or using a fireball. Fortunately it could not follow me out of the bowl shaped room and the quest only wanted Nerer dead. Anybody else get that?

Oblivion is Not Perfect