- Make sure Morrowind can run
- Download the Morrowind FPS optimizer, install, and get it working
- Use the Morrowind FPS optimizer to change the resolution to the widescreen resolution
- Disable the Steam in-game overlay (in Steam, go File > Settings > In-game)
- Download the MGE 3.8 SVN (you will need a copy of 7zip to extract), install according to instructions
- Run MGEgui as an administrator
- Follow the instructions here to disable the broken Morrowind sun texture, and replace it with a new shader
- You need to change the timestamp of the Data Files/Textures/txsunflashgrey05.DDS file to some time after the timestamp of the root .bsa files. To do this, you can use PHP or Cygwin's touch, but I used the Attribute Changer
In order to check that MGE is actually running, add one of the random shaders (e.g. "64 colours") to the shader chain. This will change the colours of Morrowind and will be easily noticed.
If MGEgui crashes with a .Net System.NullReferenceException, make sure that you have properly copied over the d3d8.dll and d8input.dll from the MGE download.
Finally, you can play Morrowind.