The code has long been known to be a Vigenere Cipher, with the code word "Cosades". Because the player is eventually given a plain text version later on in the game, it seems as though no one has endeavored to actually decipher the document. However, the decryption given to the player by Cosades is incomplete-- the original is approximately twice as long as the version one receives from Caius.
When I recently started a new "scholarly" character to play in Morrowind, I decided to decipher, by hand, the entire document. The first section is closely matched to the decoded version in game, though there are some typos not present in that version. More interesting however, is that the latter half of the document is comprised of an attachment, including The Stranger (with an interesting reverse repetition of one line), and a line-by-line commentary on it.
First, the raw text as deciphered, with the original line breaks from the in-game reader.
ATTACHMENTTHE NEREVARINE PROPHECYTHIS MOST COMMON VERSE IS ONECOLLECTED FROM ASHLANDER TRIBESMENOUR INCOMPLETE SOURCES SUGGESTTHAT THE ASHLANDERS HAVE A STRONGTRADITION OF DREAMVISIONS ANDPROPHECIES AND THAT AMONG THEASHLANDERS THERE ARE MANY OTHERVERSE PROPHECIES CONCERING THENEREVARINEWHEN EARTH IS SUNDERED AND SKIESCHOKED BLACKAND SLEEPERS SERVE THE SEVEN CURSESTO THE HEARTH THERE COMES A STRANGERJOURNEYED FAR NEATH MOON AND STARTHOUGH STARKBORN TO SIRE UNCERTAINHIS ASPECT MARKS HIS CERTAIN FATEHIS CERTAIN ASPECT MARKS HIS FATEWICKED STALK HIM RIGHTEOUS CURSEHIMPROPHETS SPEAK BUT ALL DENYMANY TRIALS MAKE MANIFESTTHE STRANGERS FATE THE CURSESBANEMANY TOUCHSTONES TRY THE STRANGERMANY FALL BUT ONE REMAINSNOTES WITH LINE REFERENCESPRESUMED TO REFER TO EARTHQUAKESAND ERUPTIONS OF RED MOUNTAINALSO KNOWN AS DAGOTH UR POSSIBLYREFERS TO THE BLIGHT A LOCAL PHENOMENONSLEEPERS SEVEN CURSE REFERENCESARE OBSCURETHIS IS A COMMON TROPE FOR LONGTRAVEL BY DAY AND NIGHT BUT HEREALSO SPECIFICALLY REFERS TONEREVARS FAMILY CREST BORNE ONSTANDARDS ARMOR AND WEAPONSOBSCURE TAKEN HERE TO IMPLYSUPERNATURAL BIRTH OR AMBIGUOUSOR SECRET PARENTAGE OR BOTHSTARKBORN MAY MEAN ORPHANED ORNAKED WITHOUT PARENTSASPECT REFERS HIS FATE AS FORETOLD [SIC]IN THE STARS THE SUBJECTSHOROSCOPE MATCHES THE PARTICULARSOF THE PROPHECIESCONVENTIONAL COMPLAINT OFPROPHETS NO ONE PAYS ANYATTENTION TO USPERHAPS BY OVERCOMING THE SEVENCURSES THE STRANGER IDENTIFIESHIMSELF
Here is the same, though with likely punctuation. The line numbers are added, as they seem like they may have been in the original, based on context.
Attachment
The Nerevarine Prophecy:
This most common verse is one collected from Ashlander tribesmen. Our incomplete sources suggest that the Ashlanders have a strong tradition of dream-visions and prophecies, and that among the Ashlanders there are many other verse prophecies concerning the Nerevarine.
[1]When earth is sundered, and skies choked black,
[2]And sleepers serve the seven curses,
[3]To the hearth there comes a stranger,
[4]Journeyed far 'neath moon and star.
[5]Though stark-born to sire uncertain,
[6]His aspect marks his certain fate. His certain aspect marks his fate.[sic]
[7]Wicked stalk him, righteous curse him.
[8]Prophets speak, but all deny.
[9]Many trials make manifest
[10]The stranger's fate, the curses' bane.
[11]Many touchstones try the stranger.
[12]Many fall, but one remains.
Notes with Line References:
[1] Presumed to refer to earthquakes, and eruptions of Red Mountain, also known as Dagoth Ur. Possibly refers to the blight, a local phenomenon.
[2]Sleepers' seven curse references are obscure.
[4]This is a common trope for long travel, by day and night, but here also specifically refers to Nerevar's family crest, borne on standards, armor, and weapons.
[5] Obscure, taken here to imply supernatural birth, or ambiguous or secret parentage, or both. Stark-born may mean orphaned, or naked without parents.
[6]Aspect refers his [sic] fate as foretold in the stars. The subject's horoscope matches the particulars of the prophecies.
[8]Conventional complaint of prophets: no one pays any attention to us.
[9][10]Perhaps by overcoming the seven curses, the stranger identifies himself.
I don't mean to be presumptuous, but I think I may be the first person to fully decipher the document, as I couldn't find the text of this attachment on any of the popular lore sites. Should I create a page on the UESP, and submit a copy of my work to TIL?
EDIT: Forgot this forum used the blackout spoiler tags, rather than the collapsible ones.
EDIT, the revenge of the typo: Fixed errors in my line breaks for the unmodified text.