Morrowind GOTY went from being 900MB (vanilla) to 10GB (modded) when I had it installed. It's ridiculously easy to get caught up downloading mods for this game, so be careful.
Install the patches and mods you plan to use for your first playthrough
before you start playing for real. Some of them require/recommend a new game.
I would recommend avoiding user-made expansions and unnecessary game changers for the first playthrough. Go all out on the second, though. Be aware that the more mods you install, the longer the game will take to load (from launch to title screen).
Worth looking into: Tamriel Rebuilt, Book Jackets, Mesh Improvements, Darknut's MW Armor Texures, Darknut's Creature Textures, Potion Scroll Icons and Potion Sort, Better Skulls, Magic Icon Border, Better Books for Morrowind, and Better Bodies.
Gamespy has a Hall of Fame with a list of the highest rated morrowind mods, by the way.
Overall, install the necessary mods and patches--the ones that would improve your experiences in the game without diverting too far from what the developers intended.
If you are ever interested in a
very different experience, try the Predator: Hunters and Prey mod.
Wrye Mash is a highly recommended utility.
Fair warning:
As you explore the game world, you will encounter many foes. Their corpses will remain where they fell until you choose to dispose of them. That is, delete the deceased NPC or creature from the game. The more corpses left to rot, the slower the game may run. Though this will not be noticed for some time, it is better to know now than to go on a corpse hunt in order to decrease lag later.
Personally, I did not dispose of noteworthy NPCs (interesting names, quest related, etc).
Dzsono: I recommend downloading [url=http://theelderscrolls.wiwiland.net/?title=Daggerfall_:_DaggerfallSetup_EN]this version of Daggerfall[/url]. It has all the most important stuff in one package so you can play the best version available right out of the box.
Note: the site seems to be down at the moment, but I expect it's only temporary. Here is the [url=http://webcache.googleusercontent.com/search?q=cache:http%3A%2F%2Ftheelderscrolls.wiwiland.net%2F%3Ftitle%3DDaggerfall_%3A_DaggerfallSetup_EN]Google Cache version[/url] of the site.
I installed the same version.
Daggerfall's quite the game. My only complaint is how easy it is to get lost in the dungeons (let alone find what I'm looking for). If I could skip the mazegeons and focus on the story, I wouldn't have taken a break from it.