I'm not sure what would be causing that problem with Morrowind, but it's possible that there could be issues with the games cache on the hard drive.
The Xbox creates three 768 meg files/partitions on the drive which are used to cache data copied from the DVD.
I've been having issues with Riddick on mine, but it could be memory problems as some games take exception to running on top of a custom dash.
I've never been able to get Unreal Championship working on my modded box, which is kinda funny
How long have you had your box for? Microsoft support can be very helpful about exchanging them if it's not very old. Heck, age may not even be an issue.
When I had a PS2 I had some serious troubles with GTA3. To the point that I tried 3 copies of the game to no avail. It was the only game I had trouble with, and it always kicked in on the second city. Nobody could figure out why, but the EB still bought it from me when I decided to get rid of it.