i have no idea how to install morrowind addons and whatnot. and i have played many other games in windowed mode.
plus morrowind is great in fullscreen even without MGE, but i can not record videos in full screen mode cause of the blinking *unknown reason* (iv contacted gamesas support about it and they dont know. but best way around it is to record in windowed mode.
and i doubt MGE will improve this slow video anamation, laggy mouse and jumping game play
MGE will allow you to run Morrowind in your monitor's native resolution, which will make it look better, that's all.
As I stated when running certain application in Windowed mode, they may not trigger the graphics chipset's 3d accelerated mode. In 2d mode games will run slowly, especially on an already weak chipset.
By blinking do you mean like the taskbar is bleeding through? You can fix this by checking a few compatibility options on the Morrowind.exe or Morrowind shortcut. Check the following:
Disable visual themes and
Disable desktop composition.
This should fix the problem. If not, what recorder application are you using.