Is it possible to stop monsters from respawning in Oblivion ? Is it also possible to prevent monsters from auto-leveling with your character?
Sure it is, it just requires finding the right mod..
Mods affecting the spawn rates and leveled encounter lists are a dime a dozen, so I won't bother to recommend specifics. (Similarly, not having used any, I feel unqualified.) Browse reviews and enjoy.
Martigen's Monster Mod should fix your monster leveling problem. One of its features is:
Statically scaled levelling -- meet creatures and NPCs more powerful than you, and less powerful than you, regardless of your level as you level.