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If that doesn't sound confusing enough, the game may try to make predictions based on this possible chain of events, even if you haven't sold either objects, whereby it marks entire stacks rather than single objects. Then the guard A.I. removes the second object and lets the merchant keep the first object, figuring it is the legitimately owned object. The game cannot retrieve an object once it has been sold and therefore can't account for it so it accounts for any spares you have instead. This may be an object stacking bug that was created when a developer tried to foolproof a possible exploit involving hiding an object by selling it back.
But then all of this assumes you even tried to sell one of the objects back. It could also be a bug regarding an inability of the game to mark stacks at all once they've all been lumped together. That is a common bug that happens in other games as well. In order for this whole misassociation thing to be solved, multiple objects need to be labelled differently based on what happens to them so that they can't be stacked. They can't just be tracked by the NPC A.I.'s in this game once they've been stacked because once that happens the status of the stolen object becomes identical to the rest of the objects in that stack, whether the entire stack gets marked as "Stolen" or not.
This should be fixed in the MCP, though. What version do you have? When did you download it? There is a similar fix that the MCP does cover so I would suggest going through the MCP itself and checking it. If it is checked then there could be an issue with the MCP instead.
I tried this out myself and ran into the same problem so I am not sure what is happening, only that I know this is definately a bug.
OP said they bought a mortar and pestle first. Then they stole the second one.
EDIT 1: Added to sentence in third paragraph and added separate sentence.
EDIT 2: Added sentence to second paragraph and separated first line in response..
Morrowind tracks items based on their base objects. Multiple instances of items with the same internal ID (e.g. your two Master's Mortar & Pestles) are tracked as stolen or not based on that ID, e.g. steal one piece of saltrice and suddenly any saltrice you obtain, even by picking it in the wild, counts as stolen. ._.
MCP[www.nexusmods.com] currently offers this fix:
This makes stealing stuff much more bearable in certain cases, but doesn't change the stolen flag's scope (presumably it's too difficult to do).
It's basically the biggest glitch in morrowind that's been unable to be fixed in the last 15 years.
Your best bet is to drop everything before talking to a guard if you have a bounty
You catch a thief next day and he has 2 sweetrolls on him. He's also an outlander. Will you be so kind to assume only one was stolen? Will you bother sorting out which one? If you ask me I'd just eat both.
I mean of course this behavior is caused by technical limitations (item type sharing one ID) but there are technical limitations designers are consciously ok with, even sometimes using them intentionally.
And I don't even think it's that much of a bug, either, now that I think of it. More likely, it seems to be some sort of safeguard against various exploits that could render recognising stolen goods useless. You would be able to steal something, trade it in for the same thing somewhere else, then sell the duplicate back to whoever you stole the original item from.
To go even further, let's say you have two merchants selling the exact same thing. You steal the same item from each of them and cross-sell them. Giving each item their own unique merchant tag, then trying to foolproof any possible exploits, would probably make the required programming too unnecessarily complicated when all you would need to do is add a generic Item Missing tag instead.
The way it is in Morrowind, it's an elegant design and the issues it causes ain't really issues. For most items it doesn't make sense for guards to recognize them as unique because they're as generic as pieces of bread.
Like what kind of divination magic guards use in Skyrim to know it's THIS particular ruby that was stolen?
So both designs have limitations and the actual reason people complain isn't concern for proper work of a game mechanic, but the fact that they can lose more than they expected and cannot exploit the system the way they're used to.