Overall i like Morrowind's UI and how i can move/resize the windows around the view and pin them (mainly the map). There are a few issues i have with the UI though.
One is that when a window is pinned the frame wastes space. I'd prefer it if the frame would either disappear and be replaced with an outline or if there was an alternative thinner frame. A related issue is that since i most often pin the map, i want it at a small size, but sometimes i want to fully open it to cover the entire screen - a maximize/restore button would help there. Both are minor issues, just some nice things to have.
A bigger issue is that when i carry a lot of stuff - which is pretty much all the time in Morrowind after the first 30 minutes of gameplay or so - i often want to find something specific or, when i carry too much, i want to throw out some stuff. The icon view just doesn't cut it because the icons are very similar and do not provide enough information at a glance so i have to hover over each one to see what exactly they are, how much they cost and how much they weight (after all the first stuff to throw away once i go over my weight limit is the heaviest and cheapest items). Oblivion's UI might have its issues (big fonts, weird tabs) but one thing i like is that the items are on a list with explicit columns for name, price, power and weight and you can sort your inventory by any of those. One issue with Oblivion's arrangement is that you can only resize vertically (in Oblivion you can't resize at all, but let's imagine using Morrowind's UI for everything). This could be fixed by using an arrangement similar to what Windows Explorer calls "List mode" (in the View tab) but in addition to icon and name there would also be columns for any other item details (price, power, weight, whatever) and like List mode, the items would grow downwards and once they hit the bottom, they'd start again from the top after the rightmost item, with a horizontal scrollbar. Also filtering via text would be nice.
Another thing would be to somehow any topics in conversations that you have already read. Morrowind has a lot of repeated content in conversations and especially after a few hours in the game you can have a very long list of topics (which BTW i really like as a conversation system since it doesn't force any sort of "voice" on you), so being able to skip over topics (but without hiding them since after all you may still want to re-read them, e.g. for following some instructions) you already have read would be nice.
For the last two (filtering and topics) there seems to be
this mod but i never used it myself.
Finally, as someone already mentioned, it'd be nice if items that i cannot sell to a merchant would be hidden or grayed out (grayed out would be better because i'd like to know what i already have in my inventory, though if possible the non-grayed out items should be sorted at the top). Also this is more of a gameplay feature than a UI one, but if i'm able to sell stuff and buy stuff, i'd really like being able to trade with both cash and items like in Fallout - in other words, i should be able to buy something expensive by trading something else expensive (and perhaps some extra cash). And haggle, i like haggling in games :-P.