Let me explain my coolest character ever.
I used to play D&D (pen & paper game) playing a monk there is unarmed and unarmored. I figured, let's try that in Morrowind.
So i picked the Breton Race, unarmed and unarmored skill (and some more but i kinda forgot those, coz it's been a year or more since i last played Morrowind) and started playing.

It's a pregnant-dog. really, the start is freakin' impossible. You first got to hit someones fatigue all the way down before you do any damage, so forget humanoid opponents. The start of the game was finding scribs and pummeling the little poor creatures.
But then.. when you level up a bit, you become "da bomb" of the game, seriously i have never been able to defeat Daedric creatures that fast. Even better, i was never able to defeat the basterds at such a low level.
The reason is that with 3 or 4 strikes their fatigue is depleted, they fall down, and they cannot defend themselfs anymore.
Now i must say, i see them as defeated the moment the fall on the ground, so they are still alive. It takes very long (especially at low level) to actually kill them, but you have all the time in the world. Even 2 or opponents at the same time is possible.

Then at higher leve it is increadible. One hit and even the strongest opponents in the game are flat on their backs. and without any magic on your weapons (your fists ) you can kill them very fast. seriously try it. I remember that i made my character very magic resistance, this feature (i thought is was his sign) made you increadibly magic resistance, but you don't regenerate "mana".
Well you've got to figure out the most appropriate skills and stuff, coz as i said, it's been a long time since i played the game


[edit]
pregnant dog... hahaha, nice pregnant-dog pregnant-dog pregnant-dog

Someone called me a pregnant dog just recently. Still trying to get my head around the concept of that insult. ???

I can only imagine the slow start for your monk character. Personally I have always made hand to hand combat a primary skill. I even duked it out with an Ogrim Titan the other day.

I ate his heart.

Yeah, can you imagine the eas of the fight when you ONLY use hand to hand combat the entire game? my best other weapon skill was Bow (15) then came the swords and stuff, still the starting values, so around 5 or 10 :-)
Ogrim Titan's (the big green ones right?) are real *kittie kittie*'s then, they walk to you, you hit, they're down

about the concept of Pregnant Dog... it is the censorship of this forum
B I T C and a H.... (but you're a mod, so this is probably information that isn't very shockin to you)

I never cease to be shocked/amazed.

What???

I thought it was FEMALE dogs that were B I T C H E and S, not pregnant ones. Maybe it's different here in England. (Vaanic knows best, M'kay?)

About your character, how did he manage against ghosts and undead stuff?

Well, for me when I replayed recently, I did not have any special or magical weapons. In fact, this happened when I came across the Ogrim. My character was beefed up (thanks to the console...a continuation of my last character.) so I duked it out with him.

Hands...ie human skin seems to count as special material. I have never punched a ghost though.

I don't believe hand to hand works against enemies who are immune to normal weapons. There is a mod called "Fists of Fire" by Argent that adds a variety of cast on strike spells for hand to hand and gloves that can be enchanted with cast on strike. I had an Imperial Monk character named Marius Nothus that got up to level 50 using only hand to hand for combat. I used Fists of Fire and a few other special Monk mods though.

O yes, ghosts, i forgot... There comes a moment in the game when simple ghosts cannot kill you anymore, because they simply cannot hit you (my unarmored skill was too high). Then you find a ghost, start hitting it, and as you said correctly, it will never die. But your skill hand-to-hand does raise
and i walked around with an bow and arrow, for these encounters