Got the Steam version of this a while back and decided to load it on my Dell XPS M1730 laptop (Intel Core 2 Duo, 4GB RAM, nVidia 8700M GT SLI, Vista 32-bit). As recommended by the confirmed solution thread on this site, I installed Morrowind FPS Optimizer right off the bat to set the resolution to 1920x1200 and to increase the maximum view distance when above a certain FPS threshold.
Unfortunately, I found that my FPS was *horrible* in the first town (15 FPS when standing in the middle of town facing roughly north) regardless of view distance. This seemed ridiculous since Fallout 3 ran pretty well on the same system. After extensive Googling and trying other things (including toggling SLI and vsync settings in my video drivers), I decided to try running without Morrowind FPS Optimizer and the game ran much better (~50 FPS in the previously mentioned location).
I then decided to play with Morrowind Graphics Extender ( http://morrgraphext.sourceforge.net/ ), and found that it has all of the relevant features of Morrowind FPS Optimizer (widescreen resolution selection and on-the-fly draw distance adjustment) without any of the performance hit. The downside of MGE is that I have to either disable UAC, or else run both MGE's config utility and Morrowind itself as administrator because MGE doesn't know how to find the Morrowind registry entries otherwise.
Just wanted to share my experience in case anyone else runs into this.
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