Why, when I raise my mercantile to 100, does everyone lowball me to about 10% of the value and only take about 40%.? Before raising my mercantile I was getting great prices right off the bat. This must be a glitch. Is there a way to fix it?

It's a known Bug:

http://www.uesp.net/wiki/Morrowind:Mercantile

"After you reach 70+ skill in Mercantile, there is a chance that traders will begin to offer you less for your wares the higher their disposition is to you. A work-around is to temporarily lower their disposition by asking for a high price and getting refused a few times. Cancel the trade and then offer the goods again, and hopefully you'll get a better deal. This is especially useful when dealing with enchanters trying to recoup your money with high-priced weapons. This is fixed in the Morrowind Code Patch."