Yes, the Nords did once rule Morrowind, before Veloth led the Chimer there. That's when they built that funeral boat below that underground maze.
This qoute from PGE 1, seems to indicate that the Chimer were alreader living in Morrowind, when the Nords invaded.
When first we hear of the Dark Elves, they were divided into numerous petty clans, half of whom were at war with the other half at any given moment. The Nord Sagas speak of Dark Elven warriors pledging themselves to any Nord chieftain who went to war with their clan enemies, a circumstance which undoubtedly facilitated their Conquest by the Nords. The Dark Elves appear in the written record in 1E416, during the War of Succession which destroyed the First Empire of the Nords: "And seeing that the Nords were divided, and weak, the Dunmer took counsel among themselves, and gathered together in their secret places, and plotted against the kinsmen of Borgas, and suddenly arose, and fell upon the Nords, and drove them from the land of Dunmereth with great slaughter." Thus ended the First Empire of men, at the hands of the Dark Elves.