I've been having a lot of problems getting MGSO 3 to work on steam. It always says I don't have the expansions installed and that its not in the right directory. So my question is, do I extract the entire MGSO file from WinRar and put it in my morrowind directory, or just a specific part like the installer files? Thanks for the help

If you're using Vista or Windows7, you should install Morrowind outside of Program Files. This avoids problems, especially when using mods. You can just copy/paste your entire Bethesda folder somewhere else, like C:
That should be what the problem is here.

And yes, install the entire package to your folder.

http://www.gamesas.com/topic/1305729-mod-recommendations-for-new-players/ has a section of advice for Vista/Win7 users, and Steam users.

Thank you so much!!! It worked!