Its forcing me to install morrowind in program files.

I placed mine in h:\ludus so I'm fairly sure you can edit your folder, just look around a bit more in the installation menu. Also, I'm not sure if having Morrowind in the program files folder even matters, it's Oblivion that I think is the essential one.

Worst case scenario you can always just download another version if yours is really incapable of switching folders.

Anytime the games are installed, they should bring up a little window asking you where you'd like to place them. You're sure you didn't get a little folder icon in that window to browse the destination, or even a little text window that you could edit to erase the words "Program Files\"?

Just to be on the safe side I'd uninstall and try again if it were me. I don't know if that's something you want to do at this point, but you'll definitely want it in the right place to avoid future complications.

What I CAN tell you is that I accidentally installed Morrowind to my desktop once, and with a shrug moved the whole folder (Bethesda\Morrowind) and plopped it right into C. It actually worked fine.

Try moving it and see if it starts up and plays, saves, and loads normally from its relocated position. I'd say that if it does, you're probably okay to continue. Though, again, I would personally do a reinstall instead, being careful to make sure you don't miss the option to choose where you want the game to be placed.