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I turned the FPS thingy on in the Morrowind.ini file, and it says I'm only getting about 16 FPS on average, but it runs incredibly smooth. It seems like it is running about 60 or higher FPS. And even if I turn the AI distance on full blast, it runs very slow, but the FPS says the same thing.
Search on google for bugs.. maybe you're getting 16 FPS past the upper barrier (some games I've seen wrap at 255 or lower).. although at 255fps or around there the game would start to look slow-motion.. hm..
No, what its reporting as your frames is right. The engine runs smooth but it is slow in the fps area. My pc only gets 34fps while playing morrowind.