Like I said, it's been a few years, so I'm probably missing something very obvious. Nevertheless, here is a list of everything I've tried.
-- re-installed Morrowind 3 times with all expansions, and tried once without any expansions
-- installed the latest patch from Bethesda's site
-- the plug-ins ARE selected in the play menu (I know a few people are going to say this is the reason, but it's not)
-- extracted the files first with Vista's own software, then I tried Winzip, and finally 7-zip
-- I checked to see if all the pathnames were correct and that the files were in the appropriate folders after extracting them... then I moved them to the data files folder and merged all mesh/texture/sound etc. folders
-- .esm files are in the data files folder
-- I tried the mods with a new game and a save game
-- ran Morrowind through administrator
-- changed the .ini file for Morrowind on the final installation and attempt
One interesting note is that Morrowind ALWAYS runs in administrator mode now. I have to give permission every time I play it or move files. However, I went into properties and the "run program as administrator" is not checked. I doubt running the program as administrator is causing any problems (I did it in the past all the time with mods), but if anybody knows how to turn off administrator mode, I'd like to try that.
Thanks in advance to anybody who can help me with this issue.