BUAHAHAHA Now, I feel like the god of war. I have conquered the annoying. Thanks for all the feedback and advice here. So this is what I did.
1. Installed Morrowind GOTY. A fresh clean install right into the root folder of C:/Morrowind. Very simple.
2. Backup. I immediately did a backup and called it Morrowind Virgin.rar.
3. I installed all of my utilities. Mlox, Wrye Mash, Patches, Script Extender. Whatever I wanted. I ran them all, installed them all, set them all up
and configured them all. Got everything ready for a standard play through without it.
4. Backup, A second back with all of my utilities but with NO mods.
5. Installed all my mods For the sable dragon I just unzipped and fixed that one file to not read only. For Pegasus I just ran it out of a project as you described. Everything installed perfectly. Registered the BSA's for the modules
that required them.
Started my game and it works perfectly. On top of all of that, I have eliminated my "CTD" errors on exit. Possibly because of installing it into the root folder, not sure. So even with script extender and that teleport mod, game works perfectly.
Then 1 final backup of the mods that I wanted to start the game with. After 6 days, I am finally ready to start the game.
Thanks again for all the feedback here.