I noticed I can start the CS without the CD (even though I get the "no disc in drive" error before it starts up), and I can load Morrowind.esm. I also noticed, in "preferences", there is an option "Use data files on CD ROM" which you can disable.
I ask this because the inside ring of my English Morrowind CD shattered a few months ago, and eventually a small crack appeared in the data part of the CD, and I can no longer start anything from the CD. I was disappointed of course, but then I found out I could start the game using my German version - intro video would be in German, but anything the game takes from the installation directory is in English (i.e. most of the game). Naturally I was overjoyed I could still keep playing in English (also because savegames between different language versions are incompatible).
Then I wondered if I could mod the same way, using my German disc, and that was when I found out it doesn't seem to need the disc at all. So I am wondering if there are any restrictions - i.e. what files in modding are taken from the disc and which only from the files stored on the computer?