I am planning on creating and releasing a mod that adds a new class, a new faction based off the class, new npcs, and new buildings.

Creating the new class was easy. However, I need ideas as to where to put buildings and inter-faction relations.

The new class is "Blader", and the new faction is "Society of Bladers".

Any ideas for buildings/npc/diplomacy?

I'd suggest downloading the mod Tamriel Rebuilt and placing it near one of the Redoran cities. That way, your mod isn't in the already-crowded-by-mods Vvardenfell. Just a suggestion. If you choose not to do that, place it in a Redoran city such as Ald'ruhn or Maar Gan.

For interfaction relations, go Redoran, since they are the most fighter-style house. Or perhaps Legion, since you're doing swordsmanship (maybe they could have people trained by the Society of Blades...

Can you tell us more about the Bladers? That would help.

The Bladers are people who are what the name suggests, people specialized with bladed weaponry such as swords, daggers, and bladed projectiles such as knives and stars. I invented it quite some time ago: http://morrowind.inventivegamer.com/igdb/classes/95/blader/

The Blader class itself is a good assassin class. The player may choose their character's moral standards (theft or honor), but the Society of Bladers won't care, they just want to maintain their guild power.

I am planning to have quests involving which involve many different things ranging from assassinations to duels to simply talking.

Though not technically lore-friendly, Bladers are of Akavirian descent, like the Blades, but are more of a freelance society rather than an organized one. I would like the Bladers to have an established main base in or near Balmora (possibly many other small, miniscule bases in other areas) so that they may provide a good start for vanilla players and fun for experienced players.

I also need to know how to make unique looking items. (Create new meshes, icons, textures, etc...) How do i do that? Do I draw it on a piece of paper then scan it into the computer or something?