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are you sure you didint tweak the configuration file too mush?
One thing that comes to mind is the fact that you can completely disable Distant Land in the Launcher, and that in fact makes the game much like Morrowind was... where you only see the cells loaded in, and outside of that there's just fog. But I'm sure if it was just that you'd have already messed with those settings, but I had to ask, just in case.
I'm not entirely sure which setting in the INI controls that though, though there is the possibility that you could have changed it in the INI unknowingly.
Google RAEVWD. It is very performance demanding though so you will most likely have to kill other draw distance settings to run it smoothly.