I get this error everytime I try to start up Morrowind. About a month ago I installed this game along with the graphics overhaul mod. Everything worked perfectly but for some reason it corrupted or something. But no big deal I figured I would just wipe it and do a fresh install. But Im getting the same problem. If I hit Yes the game does run but I cant save properly also the leveling seems to be messed up. Thing is after I reinstalled it, my old corrupted saves still showed up, even thought I had deleted the entire Morrowind directory. Does Morrowind store the saves somewhere else?

The saves are stored in:

\morrowind\saves

If they are still there, you didn't delete everything.

If the game is installed under a subfolder of:

C:\Program Files\

OR:

C:\Program Files (x86)\

You should move it - please see the sticky threads for details on how to do this. At this point I strongly suggest it is the source of your problem.