I'm going to play Morrowind for the first time and I have some questions about archery and thieves.

In Skyrim I liked most to play as an archer with sneaking and thief skills. But Morrowind is much older game and it's system looks different. Also I read that bows and x-bows are really underpowered in late game compared to melee weapons.

Is there any way to create more powerful ranged weapons in game?

Or if I want to play as a thief it's better to use 2 swords or daggers?

On the contrary. Both Sneak and Marksman are difficult at the start but once you become good, the game becomes easy. I once played stealthy archer and got marksman at 65 and stealth at 70 and combination was deadly for opponents. I could take down enemies in 2 to 3 shots from a distance. I switched to melee then since the game became too easy.

You can't equip two weapons at a time unless you use a mod, even then the second weapon is more like a shield than a weapon.

Also, since you are new to the game, play it vanilla first. Then add mods for the things you don't like. Just keep in mind that failure is part of the game in vvanderfell.