I installed Morrowind via steam. I didn't install it in program files, but rather steam and morrowind through steam are in C:\GAMES.

I downloaded MGSO and ran the installer. I am getting this notification in the opening process: "It's a Morrowind Folder: No, Morrowind files are missing."
"Latest game version (1.6.1820): The exe file is missing."
"Tribunal and Bloodmoon are installed: No, both the expansions are missing."
"UAC is disabled: No. I suggest you disable it!"


the thing is, when I run Morrowind through steam it opens fine and Bloodmoon and Tribunal are there. Should I just install MGSO anyway?

Where did you unpack the contents of MGSO archive? You need to unpack whole archive and run the installer from main Morrowind folder (the one where Morrowind.exe resides).
In your case, that would be C:\GAMES\Steam\steamapps\common\Morrowind

EDIT: I figured it out. Thank you.

Awesome, I got it to work. thanks a lot!

One last question - should I disable UAC? that seems like a bad idea.

EDIT: spelling

nm