I seem to remember something from Morrowind,a book or someone's notes that suggested the Dremora were actually the lost Dwemer race,changed by their exposure to Oblivion and enslaved by the Daedra for daring to reach too far in their quest for knowledge.Or was their disappearance because of some deal with a Daedra?I can't remember the details but I remember having my mind blown because it linked the Dremora to the Dwemer.

Nope. Dremora were just created by mehrunes dagon- who is not noted for being the most intelligent daedra (he just wants to smash things)

Why does Sanguine appear as a Dremora then? Wouldnt he have a form different then one of Mehrunes Dagons lowly creations?

Cause it's a lot of work to create a custom race model for a minute of gameplay.

I've never read anything about Dremora and Dwemer being in any way related.
According to the book Spirit of the Daedra
so I don't think MD created them either.

Hi, I'm Velorien, self-proclaimed Dwemer scholar (is that catching on yet?) and I don't recall any info linking Dremora to Dwemer, ever. Although there are "theories" that the Dwemer disappeared to Oblivion (discredited by Vivec saying he had no sense of their presence in this dimension or any others, and by the fact that it's Boring Therefor Wrong) and a theory that Azura banished the Dwemer for...whatever reason, there's never anything about Dremora I've heard in any theory.

If Dremora were meant to be the Dwemer, then they've really done a piss-poor job of alluding to that, as they share absolutely nothing in common.

The currently accepted theory, as explicitly stated by a developer of Morrowind, is that the Dwemer intentionally disappeared to make themselves into the metal body of their golem god, Numidium.

Dwemer ("deep elves") are another type of "mer", as are Altmer, Dunmer, Bosmer, and Orsimer. As put into pseudo-technical jibberish by a particular Telvanni expert in the subject, the Dwemer "retreated behind color and the active principle", attempting to reverse the process of creation of the mundane from the divine, and transcend mortality. Whether they succeeded or failed is debatable, and possibly even irrelevant. Put simply, they were here, now they're not.......well, except for......sort of.

Dremora are and always were (for practical purposes) Daedra, and have nothing in common with the Dwemer that I am aware of.