This is a pants load.
I have been listening to Middle Eastern music for many years prior to 9/11. There are plenty of musical instruments in it.
http://www.sfusd.k12.ca.us/schwww/sch618/Music/Islam_Music_%26_Dance.html
Isn't an oud a lute, i.e. another form of guitar?
as a matter of fact it is true that the teachings of the prophet Muhammad (s.a.w) forbid the playing of most musical instruments, as it clearly says in the hadith (teachings and sayings of Muhammad). You can't judge what islam says by looking at other people who don't follow the religion correctly. It would be best you take a closer look into the hadeeth and the Quran, which gives you a complete explanation and guideline of how one should live their life as a true,devout muslim.