Choosing The Lady as a character's birthsign gives him or her an extra 25 endurance in vanilla. But this bonus apparently doesn't apply to the character's starting health, only to his or her fatigue. Has anyone else noticed this? Is this a bug or an intended feature? The Morrowind Code Patch makes no mention of this. None that I could find, that is.

Yes, this is normal. While it doesn't add to starting health it does give an extra 2.5 points of health per level.

Starting Health is calculated after choosing your favored attributes but before choosing your sign.

And fatigue is calculated using the "current" values (including effects from equipment or spells) or something in-between?

Thank you for both of your answers.