I have read, and re-read all recommended links and stickies, and even watched a video or two. I still feel a little unclear about downloading and installing the Steam version of Morrowind, the MOSG, and Tamriel Rebuilt.

So Steam is alreay installed in c:/programfiles(x86). I guess Steam games will install there as well, right? Do I need to change that?

Once Morrowind is installed, do I set 'run as administrator' in properties before opening or downloading any mods?

I feel a little lost about all this. I am worred I am going to completely screw it up.

If you are on Windows XP, leave it all stock.

Any OS later than that, keep as much as possible out of Program Files with regards to older games, at least ones not written for the new Windows. Morrowind for sure can not be installed in Program Files, unless doing so as an Administrator allows it to update the ini's with your mod lists and such.

I don't know if you need to keep Steam out of the PF folder as it plays well with 7, but poke around the Steam forums, they will tell you what to do regarding older games and Steam. Might have to do some Junctions, Ghostnull has some posts around here in the New Vegas and FO3 Hardware boards about doing that.

I'm on Windows 7. I am going through this guide: http://forums.somethingawful.com/showthread.php?threadid=3430891&userid=0&perpage=40&pagenumber=1 but I have to admit that I feel lost. I only started using Windows a couple days ago for the first time in a decade, and I might be in over my head here.

Do not install Steam in Program Files for any OS from Vista onwards. It just is not worth the hassle.

Install it in C:\Games (or something like that, but that's the new folder that it seems that most people use).

In answer to your question about where Steam games are installed, yes, they get installed in the same parent folder as Steam, but specifically they wind up in a subfolder steamapps/common. For example, if you install Steam in C:\Games and then buy Morrowind on Steam and install it, the full path where it is located will be C:\Games\Steam\steamapps\common\Morrowind

If you need to move Steam because you already installed it in the default Program Files location, there are instructions on how to move it manually on SteamPowered (see https://support.steampowered.com/kb_article.php?ref=7418-YUBN-8129).

However, it may be easier to simply uninstall and reinstall it (as long as you don't have any games installed with it yet).

Generally, I'd suggest NOT turning off Windows User Account Control (UAC). The Morrowind page you listed says to do so, but that defeats the purpose of increasing security.