I guess you got hit by the black screen bug. It happens when the fog distance of a cell is 0.00. There are many mods to fix this but I recommend to use http://code.google.com/p/mlox/wiki/Tes3cmd.
Is there any way to increase the ambient lighting within the game? The gamma slider washes out the colours of the entire screen, and it also affects the UI graphics. I'm not looking to brighten up the screen, I'm looking for a way for the game's renderer to increase its lighting brightness.
Open Morrowind.ini
Search for UseLinear, replace the 1 with 0
Search for UseQuadratic, replace 0 with 1
and change QuadraticRadiusMult how you want it to be. 3.0 is a nice value.