I am running MGE XE, which has an internal MWSE. Will that be enough to support other mods that rely on MWSE (like Morrowind Inhabitants). or do I need to install MWSE separately?

The version in MGE is all you need.

Thanks much my friend. There is much info out there for a new Morrowind mod user, but sometimes it can be hard to find answers to simple questions like this.