I am getting an error message in game telling me to check the MGE XE log. The log says MGE XE needs distant land to work. I don't want distant land. I like the vanilla fog. So I disabled distant land in the MGE XE GUI when I was setting up the game through the custom options in the Morrowind Overhaul 3.0 install application.

Is there a way to get rid of that message on my game screen? I went into the MGE XE GUI and disabled the dialog messages, which worked but I am wondering if there is a more elegant solution that won't involve disabling all dialog messages.

If I generate distant land and then disable it, will MGE XE be happier?

Try generating distant land, if the game is telling you distant land files are missing then it's probably a problem there. IIRC MGE still runs some of the distant land features even if you don't have it on. Alternatively, you could generate distant land, and then set the cell distance to something around two cells, which is close to the vanilla draw distance. This way you'll also be able to get shadows and other things that come with distant land.