[edit]sorry, this might be related to my mge update. I somehow cannot change the subtitle setting in my ini, and some screenshot changes in my ini and the mge settings did not work
Thanks in advance

Are you on Vista or Windows 7?
If so, you need to have Administrative control over Morrowind before you can alter any files.

The easiest way to by-pass Vista/W7 problems like this is just to change the install location of the game. Check the http://www.gamesas.com/index.php?/topic/781497-vistawindows-7-problems/ for details.

If you're using Vista or Win7, you can also copy your .ini to, say, My Documents, alter it, and then overwrite the original .ini in your Morrowind folder with the one you just edited.

I am on 7 but my install dir is a custom one and I am always logged in as administrator (+UAC and anything related is deactivated). I tried execute MW.exe as administrator, but that really does not seem to be the problem. When morrowind starts (tried without mge and mwe) in seems to import the ini settings for subtitles (and maybe some other ini changes) from somewhere else. I somehow cannot get screenshots to work as well, lighting changes do work though.
[edit]subs are stored in a registry entry es well, changed it there, did work for the game

I had a similar problem when I installed morrowind on my new laptop.

Basically windows seven has 2 programme files - a normal and a (x86)

Make sure you havnt intalled to the (x86) one, as this is the one that will cause you lots of problems! Move your entire morrowind install to just hte programme files directroy.

One other thing to consider.... If you're using MGE, the normal Screenshot method will not work. Instead, you have to set-up a macro in MGE to take screenshots.
Instructions on how to do this can be found in the MGE thread, or the MGE Wiki.