Do you really need to put Steam in its entirety into a different drive for Morroblivion to work, or is there a way around it? It'll take me hours on end to move that much data, and I'd need to actually get an external hard drive first. I've checked that I have everything installed and the load order correct, but I still get the falling through the world and yellow lights everywhere glitch. A detailed, step-by-step installation guide may be helpful, but my primary concern is whether or not all of Steam, or just parts of it, or any of it whatsoever, needs to be in a drive other than the C drive to work.
It is general good advice to
It is general good advice to not install any games under the C:\Program Files\, as Windows UAC then limits the activities you can do to manipulate files. And mods manipulate files. If you move steam outside this Program Files folder, say, under "C:\Games", then you are good to go.
Make sure you use BOSS to sort your load order, which will make MOrrowind_ob.esm load right under Oblivion.esm.

Check under FAQ only has to
Check under FAQ only has to be Moved out of windows Default Directory not to another Drive.. Make shore your Load Order is
Falling through World Space is Normanly Load Order -Or Missing Files
Oblivion.esm
Morrowind_ob.esm
Some Below Make Shore you Have
Morrowind_ob.esp Activated
Has been Question asked through Morroblivion Forums ,, Do Search on Steam Installation.