I stumbled upon and installed Morroblivion last night - after a few hours of installing and tweaking the settings I finally managed to get it working properly.
I started a Breton custom class character, did the Seyda Neen quests (tax collector, secret stash) and then went onward to Balmorra to start the Hlaalu, Mages Guild and Main Questline.
First I talked to caius who asked me to join a guild - I joined the mages guild and did the first two tasks for the Khajiit (shrooms and the fake gem). After that I went to the Hlaalu mansion in Balmorra to join them.
And here comes the interesting part - when I choose the Business topic from the female dunmer inside she gives me a "Please say that again outlander" message. In other words I cannot seem to start the Hlaalu questline at all.
Are there any special requirements I missed in morroblivion - or is my memory of Morrowind fuzzy? I could swear that I was to be given that redoran quest (since I'm human) and then some other ones so I can actually advance.

I seem to remember a similar
I seem to remember a similar problem when I played it. You just have to be level 5 or 10 or something like that, if I'm remembering correctly.