I just recommend purchasing a mod-chip, I went with the Xecuter 2 but most retailers don't sell them anymore as they're out-dated. You'll have to go with a Xecuer 3 or SOMETHING ELSE (Can't really say what else, as I'm not really that experinced in modding, but there are a lot of different chips out there). You can find some great guides on modding your xbox in the "tutorials" section of xbox-scene.
I recommend finding a trusted retailer from the xbox-scene as well, I've known some retailers to be shady and some shippments will arrive damage--or just plain won't arrive at all.
Then like mentioned above you'll have to install a third-party dashboard, which is the hard part. There are some more great guides, once you have the dashboard running (I recommend EvoX for a newbie, right now I'm using Xbox Media Center) then you'll be able to FTP to the console.
Again, you'll have to find another third-party appllication that will allow you to copy DVD-games onto your hard-drive (Morrowind is a small game, so upgrading the hard-drive isn't really important) and from there you'll be able to access the game.
So to sum it up--even if you just want to mod Morrowind, you're going to have to mod your xbox. You can do a soft-mod, but I would recommend just buying a modchip, they're much cheaper now then what they usta' be. So you will get your money's worth--believe me.