How do you buy ectoplasm on Oblivion

Go to the mages guilds or local ingredient shops in the towns. Find the merchant and buy as many as you can afford. You must be level 4 or higher for Ectoplasm to appear in a alchemical vendor's inventory. But I think I have something better for you. Go to Anvil and its docks. Look for the closest ship to the door you just came out of. There is a lady who need an heirloom recovered from the ship. The ship however is infested with the ghosts of the sailors. Kill them with magic, or a silver or higher melee weapon and you will get 5 portions of ectoplasm + a shiny new Cutlass called Redwave.