In oblivion on Xbox 360 how to you use the ichor basin

Assuming you mean at the shrine of Deepscorn Hollow, first you need to buy the Ichor of Sithis from the same person you bought the location's upgrades from. You will fill the basin and activate the shrine. After that, you can be healed from it, like from a regular shrine, but only if your Infamy is higher than your Fame.