This is a bit of a new player question, but - my recent fun and games with one of the mods I was using led me to do some investigation and would I be right in thinking that the meshes and so forth used by the unmodded version of Morrowind are read from the disc and everything that's modded is picked up from the directory?
I only ask because there are way more files on the disc than there are in the directory on my PC and for example the .esm file points at the fremora.nif file in the r directory. Well there isn't one in the r directory on my machine but it still picks it up...
So does vanilla = disc and modded = PC directories as a kind of override?
Cheers!
Mat