So I've noticed that if I turn down all of the sound knobs in Morrowind, it will mute the game yes, but it still produces the armor hit sound, and it's really loud. No other sounds are present, just the armor hit sound. So I was wondering if there was a way to get rid of this sound effect when I want the game fully muted?

I am running Windows 7 and an Audigy X-Fi music card with all updated drivers, etc.

The http://www.tesnexus.com/downloads/file.php?id=19510 (Ignore the malware warning, It's TESNexus and the issue has been solved) fixes this issue, and many others.

Also, strange stuttering may occur if you turn the (music) slider all the way down. I'd recommend moving all sound sliders a tiny bit to the right of completely muted.