Well, there are only a couple things I would change from that method.
Follow it as usual, up to step 5. After step 5, remove any extra dependencies. Some mods have Morrowind.esm, Bloodmoon.esm, or Tribunal.esm listed in the file dependency list. If so: click the box next to the Bloodmoon.esm and Tribunal.esm listings, and then press the minus button to remove the dependencies. This prevents the mod from searching for those master files to run. Since the Morrowind.esm from the GOTY edition has the blooodmoon.esm and tribunal.esm integrated, the mods will still run even if they need files from those expansions. After removing those dependencies, skip over step 6, the conversion to .esp in unneccessary. Close TESDTK, find your mod, rename it to a clean/short file name (remove extra spaces and especially extra periods) and then ftp it to the hdd as usual. HTH