Go with PC for mods (if your computer can handle it). Graphically, a fully modded Morrowind looks leaps and bounds better than Oblivion, andcan hold it own graphically against Skyrim.
But regardless of which platform you play it on, the gameplay has not aged well (mainly melee combat). There are a few mods for better combat mechanics, but they can't make the combat like Oblivion or Skyrim. If your PC can't handle a fully modded Morrowind, it may just be better to play it on the Xbox with the dated graphics.
If you do decide to try it, be warned: the game takes quite a while to get into, and is not very forgiving early on. If you can slog through the begining portions of the game, the dated gameplay mechanics [mainly combat] improve dramatically.