Oblivion Freezes When I Try To Sleep

I am at the quest where I must save Hanatier or whatever his name is, the mages guild member in Bravil from his dream. I already succesfully entered the dreamworld with the amulet but I feel off the bridge somewhere and died so i reloaded an earlier game before I go to sleep. ANd to make things worse, I contracted vampirism(early stages). I went to the altar to get healed, came back and when I try to go to sleep again, the game freezes when I click rest. THe red HDD lights stays on but nothing happens. i waited and waited and waited. Every time I reload, same thing...

I am going insane!