When I start Morrowind from steam the Morrowind launcher comes up and when I click play from there I just get the "Morrowind has stopped working" notification. I've tried all the compatibility options, made sure all my drivers were updtated, verified the cache integrity and reinstalled the game. I'm running windows 7. If anyone could help me I would be very grateful, I love this game.

It's been a while since I set up my Morrowind, but I remember having to disable the Steam Community for this game to get it to launch.

This is of course assuming that you did not install the game in either of the Program Files directory. This game will not work installed there unless you shut down the UAC, and even then, it's dicey.

Pluto has some recommendations http://www.gamesas.com/topic/1305729-mod-recommendations-for-new-players/ for steam near the bottom of his first post. there is also this thread discussing Steam and Morrowind http://www.gamesas.com/topic/1441913-definitive-steam-info/.