Just a warning for other ATI/AMD Radeon users: installing the new 12.4 mobility drivers on my laptop caused graphics glitches in Morrowind, even when the game was virtually unmodded. There were holes in some of the housing meshes in Vivec and Ald-Ruhn, as well as in the Bittercoast trees. Reinstalling the old 12.2 drivers resolved the problem.

I have no idea how many systems might be affected by this problem, and whether it occurs on both mobile and desktop systems. If you have an ATI card and have recently begun experiencing problems like the one I describe here you might want to revert to an older version of the driver.