So, simply enough, what is the general line on Nix Hounds and their potential domestication? Do the residents of Morrowind use them as hunters / companions? Can they be broken and trained, or are they just feral monsters? Bear in mind that the this is a question in regards to lore, not the gameplay of Morrowind itself.

Going by the MW CS, I can't find anything about domestication of nix hounds.

Nix hound meat is tender though :

well, weren't they birthed by Vivec?

I'm sure some temple-nut keeps them around then.

Nix-hounds are just the most common - and most rudimentary - breed of the nix. The nix-tiger are the most ferocious, but they are very rare these days. In Dres, they have domesticated a strain, and their warriors ride nix-mounts.

Sorry, never heard of this (not much of a lore buff), can I get a link from where this information was taken from? Guessing its a MK work...

Good lord, you cut directly to the chase. This information was going to be used in a Dres fan fiction, so information regarding them specifically would have been the next on my list. Do you have any reading sources I could take a peek at?

I had to make sure, but I think that's entirely, 100% made up by yours truly. The mod Tamriel Rebuilt will have the Dres using nix-mounts, though, so your fan fiction won't be alone in mentioning something like them.

There's certainly nothing that suggests the nix could not be domesticated or anything like that.

Nix Hounds are frequently found in bandit caves in Morrowind, often near the entrance. It's possible that the bandits tamed them and use them to drive off intruders, like how bandits and marauders in Oblivion sometimes used dogs. However, since Morrowind's combat system doesn't allow enemies to fight each other without scripting, it's not certain.

There is a bandit cave near pelgiad that had a holding pen with nix-hounds in it and it had bowls with rat meat in it also.

Perfect. That's the kind of link I was looking for. I'll start writing soon.

As long as I can rub a Nix-hound's tummy and ride it, I'll be all for it.

That!

I'm going to be looking up companion mod tutorials, to attempt putting a Nix Hound into Morrowind that you can tame and have follow you around. Also, the first Nix Hound related post of my story is up, http://www.gamesas.com/index.php?/topic/1160438-varis-venture/.

From the Five Songs of King Wulfharth, there is a mention of Dagoth Ur having domestic nix hounds:

"And so Dagoth-Ur, who wanted the Dwarves as dead as the Tribunal did, went to Kogoruhn and summoned his House chap'thil, his nix-hounds, his wizards, archers, his stolen men of brass."