I've tried to fix this myself, but am having no luck.
I have the Morrowind package from Steam. I believe it's equivalent to the GOTY edition.
I am running Windows 7 64 bit.
I installed Morrowind just fine, and it launches fine too, but from the main menu, when I click "Play", I get the following error:
Failed to load sky atmoshpere: Meshes\sky_atmosphere.nif.
Now, I've read all over here and seen some recommendations involving opening up CD paths in Windows Explorer and manually copying files around, but I have no CDs, and my paths are all different -- at least I can't find the things people are saying to look for.
Similarly, I can find the Setup installer executable for Morrowind, and can run it in Administrative mode, but can't figure out where I should install the files to -- presumably they'd overwrite the "bad" installation if I got it right.
I'd like to get this to work, and my situation can't be all that different from a zillion other folks out there trying to run this after buying it on Steam.
(From what I'm reading here, it is a problem with the installer, and where the files are placed, and not really a Steam problem per se. I don't really care though, if it's Valve's issue or Bethesda, just am sure someone here has gotten this to work.)