The level up system was bad. The thrust/chop/slash system for weapons is awkward. Every attack costing stamina is bad for early characters. The excessive number of weapon categories, combined with short and long blades being the only ones that were common. The persuasion system was just bribe people to get what you want, or taunt them for free murder. Run speed being a skill, jumping being faster than running and being a skill as well (combined with the level system this can cause problems). Item durability in general. The encumbrance system, and containers having weight limits. The spell making and enchantment system had some cool things, but it was also trivial to break the game in multiple ways. The quest tracking and journaling was garbage. Alchemy was undercooked. Merchants had way too little gold so selling became annoying by mid level. The haggling quickly got annoying as you could sell at extreme markup or buy for nothing fairly easy. Magicka didn't regenerate, so being a mage was annoying at early levels until you had sufficient potion access.

There's also some things that are more bugs I think than bad mechanics. Stealing from a merchant flagged every copy of an item as stolen from them. I once managed to make every redoran guard hostile to me on sight, which got really annoying.