This legend is marked as untrue by many people. Really, the only people that belive it are considered insane by the temple and put to death. But these people arnt insane. They are cursed by the stone to forever be obsessed with it. They had seen the stone before, but could not reach it. These people told others of were the stone was. They didnt belive them, they just dismisssed him as insane and reported him to the temple.
One man belived one of them though. The man that belived him's name was Mayed. He was an Altmer. He had been studying artifacts from long ago. He had not heard of the stone from any books, but he had a feeling it was true. After all, the Aylids were true and so were there atifacts, so why not this? He set out to find the stone, which the man had said was in a cave, filled with dreugh. He asked around and was directed to Koal Cave. He went in, slayed the dreughs inside, and scoured the ground for the stone. He had looked forever and he couldnt find it when his eye caught a gleam at the bottom of the water. He swam down and moved the dirt out of the way. He saw that it was a large rock, with magic eminating around it. He took it and wisked it away to his home, were he studied it. He learned it had amazing powers that even HE didnt understand. He was bragging about it when the temple heard and sent guards to investigate. They sent two guards, but none came back. When they sent a team to find them they just found a gaurd stabbed in the neck and a guard with no noticable injuries, but dead. Mayed had to leave. If more guards came he knew that even the power of the stone couldnt stop them all. He needed to get out of Morrowind.
And if he had to, off Tamerial.
The Elder Council had called in a team of mercenaries to track Mayed down. They would aslo be accomponied by a few legion guards. Unfortuantly Telvanni also knew of this stone and wanted for themselves, so they hired a few folks to find it. It was a race between the two to find the Altmer. But would they ever find him?
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This is were you come in. You choose wether or not you want to be with the Imperial Legion or the Telvanni. Or even an individual not connected to either just trying to get the stone.
EDIT:Changed the story dramatically on advice of Darkom95