I think half of the replies in this thread are silly. I don't think something fits the definition of "overpowered" if you have to grind for 40 hours to unlock it, or if you only get it after finishing the game. Things like that aren't overpowered. They're sufficiently powered for the effort required to get them. Knights of the Round definitely does not count.
What I think does count, is things that aren't too hard to do. And/or are available fairly early in the game, allowing you to actually breeze through the game by abusing them.
On topic, I vote Oblivion. It's magic and equipment system is utterly broken. Some notable things include:
Being able to reach 100% magic resistance fairly easily and early on. Pick Brton class, and find a Mundane Ring, and you're gold. There are plenty of other ways to do it too.
Custom spells with the Drain Health spell effect. This spell reduces your enemy's health temporarily - ie, when the duration expires, they recover what they lost instantly. BEcause of this, the game values it based on it's duration. Doing a reasonable amount of damage for a reasonable duration, has a reasonable mana cost. But if you use the minimum duration (1 second) then the spell is ridiculously cheap - and castable without any magical skill - regardless of how much power you put in it. What makes this broken is that the spell is still able to kill people, so drain health 100 for 1 second is an instant death spell for anything with <100 HP, at practically no mana cost. Even if it doesn't kill outright, it gives you a 1 second window to finish off the undoubtedly weakened enemy, which is enough time for two melee strikes
Another broken part about the spellmaking system is using "Fortify Skill" spells. These work similarly to the above, in that they are valued based upon their duration. The flaw is that time is paused during certain things, such as being in conversations or menus. This is exploitable by casting Fortify Mercantile for 1 second on yourself, just before talking to a shopkeeper, to get ridiculous deals. You can also fortify your armourer skill just before opening your inventory to repair your equipment.
The Chameleon effect. On spells or equipment, reduces your visibility to the world. It is uncapped and can go to 100%, which is possible to reach with armour enchantments alone. Read here to see how broken this is: http://www.uesp.net/wiki/Oblivion:Chameleon
I was also fond of adding a 1 second paralysis effect to my damage spells. This causes enemies to freeze in place and fall over, and it takes them about four seconds to get back up and pose a threat again.
One could argue that spellmaking isn't immediately acessible, and requires you to complete the seven mage guild quests. However, about five of those are a complete joke (only two require unassisted combat) and the whole set can be done in about 2 hours, almost at lv1 before you do anything else in your game.
Oblivion was a thoroughly broken game if you tried hard enough. But it was also really awesome
