Alright so I posted another topic for this issue but didn't want to ressurect it.......
http://www.gamesas.com/index.php?app=forums&module=forums§ion=findpost&pid=16982573
I don't have a large amount of experience modding on Windows 7 so I really don't have any idea what the issue could be.
I REALLY want to enable distant land becuse having MGE and not using it seems redunadant......
Any help would be greatly appreciated!

Resurrecting your own thread, which is only a few weeks old, is perfectly acceptable.
:)
Most MGE problems are asked to be kept in the http://www.gamesas.com/index.php?/topic/1159516-morrowind-graphics-extender-mge/. You'll get quicker responses from the pros.

Thanks!
:)