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https://www.reddit.com/r/Morrowind/comments/ok8qct/morrowind_launcher_settings_not_saving/
"Morrowind only saves your settings if you run it in administrator mode. Go into "properties" for both the launcher and morrowind exe files and select "always run as administrator". This will then also work fine when you start the game through steam (you will unfortunately always have the windows UAC pop-up on startup). Remember that you might have to do this again after applying MCP. EDIT: Sorry, I missed you already knew about that. But I have to say I used this method and modded my game and no problem ever occurred."
By the way, I never had any problems with setting savings. It's always easy to blame the game (which obviously has bugs, just like every other game, but not every perceived game bug is a real game bug - as I know myself from experience :-)).
Could be that you have the game in program files, which windows in their infinite wisdom changed permission properties of program files around the windows 7/8 era despite the fact that every game in existence used it by default - thus breaking all those games.
Could be one drive or anti virus software that's blacking you too.
Could be that you need to run as administrator too.
You can install on an external disk no problem. The only issue he was getting at was if you installed it on an external disk on a different computer, then plugged it into another computer and tried to play - then it would need registry editing.
I figure that having to set the game setup file every time you boot the game is just part of playing the game. Consider yourself lucky you don't have a sporadic work/doesn't work mapping. Going to all the trouble to get something to function the way you want instead of the way it does and you don't like having to do it every time says something about the way you play games in general.
I like the feature because I can change things on the fly without having to save and reboot, but to each his own.