Can't seem to find where you can turn the graphics down on this game. I'm trying to run it, and it's really choppy in-game. what can I do?

Type ESC, then click on Options.

Turn down your view distance and your AI distance.

Open the Morrowind Launcher, click on Options.
There you can lower the screen resolution.

tips to boost performance:
Turn off shadows (in your Option menu)
Be sure to run the game in full-screen mode, not Window mode.
Close all other programs that might be running.
Open your Morrowind.ini file and change the line Max FPS=240 to Max FPS=50

I suggest also getting the http://planetelderscrolls.gamespy.com/View.php?view=utilities.detail&id=22. It can help stabilize that "choppiness" you are getting.
It has the option: "Do you want to see further..." which will let you control the View Distance with your mouse wheel.
Also "Hide objects that are currently small..." is great for older/weaker computers, which it seems like you have.