Running Morrowind on a eMachine T6410 (upgraded to 768 RAM) with a nVidia GeForce 6200 and getting frame rates as low as 5 in the cities. The drivers are all up to date and Counter-Strike: Source runs at 45 FPS at medium-ish settings.

.INI settings

[General]
;Test TES 0=morrowind.esm

;Starting Cell=Pelagiad
;Starting Grid X=0
;Starting Grid Y=0

Show FPS=1
Max FPS=60

;-1 Use raw data, 0 Use Newer, 1 use Archive Only
TryArchiveFirst=0

SkipProgramFlows=0
DontThreadLoad=0
ThreadPriority=-1
ThreadSleepTime=4

Clip One To One Float=1
Flip Control Y=0
SkipKFExtraction=1
PC Footstep Volume=0.7

Disable Audio=0

Background Keyboard=0
Use Joystick=0
Joystick X Turns=0
; X=1, Y = 2, Z = 3, XRot = 4, YRot = 5, ZRot = 6
Joystick Look Up/Down=6
Joystick Look Left/Right=3
; 0=no, 1 = XBox Maps, 2 = Exterior Cell Maps
Create Maps Enable=0
Screen Shot Enable=0
Screen Shot Base Name=ScreenShot
Screen Shot Index=0
Beta Comment File=
Interior Cell Buffer=32
Exterior Cell Buffer=64
Number of Shadows=6
Maximum Shadows Per Object=3
MaintainImportedDialogueOrder=0
ExportDialogueWithHyperlinks=0
UseExistingTempFile=0
CanMoveInfosWhileFiltered=0
Editor Starting Cell=Moonmoth Legion Fort, Prison Towers
Editor Starting Pos=-112.749161,477.272614,-34.998627
Editor Starting Dir 0=0.917121,-0.395613,-0.048786
Editor Starting Dir 1=0.398609,0.910227,0.112248
Editor Starting Dir 2=0.000000,-0.122392,0.992483
Subtitles=0
ShowHitFader=1
Werewolf FOV=100

[LightAttenuation]
UseConstant=0
ConstantValue=0.0
;
UseLinear=0
LinearMethod=1
LinearValue=3.0
LinearRadiusMult=1.5
;
UseQuadratic=1
QuadraticMethod=2
QuadraticValue=16.0
QuadraticRadiusMult=1.0
;
OutQuadInLin=0

Any help would be much appreciated.

You certainly are above the system requirements but I think your problem is that video card. It's horrible, sorry.

Things you could try are disabling background processes and defrag your hard drive. I wouldn't expect much a noticeable performance increase though. Other than that you are looking at getting a new video card if you want any real performance increases. That card just too under powered, it's the lowest end card of it's generation which was four generations of Nvidia cards ago. Granted it's an old game but it still needs pixel pushing power to run it smoothly.

You could reduce your screen resolution, this could actually help quite a bit at the cost of the game looking "nice" if you play on a LCD.

Sorry, just noticed the date...