Thank you for the help I went to the forum and noticed the moderator said to first change the resolution enter the game, exit the game and reset the Resolution.
So being braindead I set the computer screen resolution to 1440x900 I reinstalled Morrowind and set it's resolution from 1024x768 to 1152x 864. Morrowind works just fine. I believe it was the reinstall but the screen resolution thing worked for me before on xp.
So once again thanks for the advice.