StuartD MFC,
I see you are running 64 bit Windows 7 or Vista. The issue is most likely that windows doesn't allow one program to write to another program inside the Program Files or Program Files (86) directory.
Reinstalling Morrowind won't work as long as Steam is installed in one of those directories. You will need to start by installing STEAM in a user defined directory, mine is E:\Gaming\Steam. If this is not possible, then the issue can still be resolved by altering permissions for that system directory, but that is best done by one with more experience than I, so I'm not even going to attempt to explain that process.
Unless you have experience editing the registry, you will need to uninstall Steam. If you are comfortable editing your registry, you can just cut and paste or move the directory, but since this can also be complicated and dangerous, I'm not going to explain this process either.
The safest way for you to start this process over would be to uninstall and reinstall Steam. Until you do this, *most* third party programs such as MGE, MCP and MWSE, will not be able to alter the files they need to to work.
To uninstall and reinstall Steam:
- Move the steamapps directory to a completely different directory, Desktop will work.
- Uninstall Steam completely.
- Delete the Steam Folder
- Reinstall Steam to a directory you have made *OUTSIDE* of Program Files or Program Files (86)
- Run Steam and close it without logging in.
- Move steamapps back into the new Steam directory.
- Open Steam and log in.
For Morrowind and MGSO:
- Do a clean install of Morrowind up to the latest Bloodmoon patch.
- Start the game to make sure it plays and close it.
- Restart the MGSO installer.
Good Luck!