After some time I was able to find the solution to my issue. I guess I didn't read the installation Readme well enough*
Problem: The game starts me with a generically built character near Fort Ronan and will crash if I start New Game after the cut-scene at the very end of "loading area". I'm running the Steam version. The game seems to run Ok as long as I don't start a "New Game" but that's no good.
Fix: Make sure you use the ini that is with the English Patch version!
* "unpack the Arktwend_English patch archive to the Morrowind
directory and verify that Arktwend_English.esm is put into "Data Files".
This will also put a Morrowind.ini in your Morrowind directory, which must
be used for playing Arktwend. THE ORIGINAL MORROWIND.INI WILL NOT WORK WITH
ARKTWEND."
Problem: The game starts me with a generically built character near Fort Ronan and will crash if I start New Game after the cut-scene at the very end of "loading area". I'm running the Steam version. The game seems to run Ok as long as I don't start a "New Game" but that's no good.
Fix: Make sure you use the ini that is with the English Patch version!
* "unpack the Arktwend_English patch archive to the Morrowind
directory and verify that Arktwend_English.esm is put into "Data Files".
This will also put a Morrowind.ini in your Morrowind directory, which must
be used for playing Arktwend. THE ORIGINAL MORROWIND.INI WILL NOT WORK WITH
ARKTWEND."
glad to hear that you solved these two problems 
the combination of Arktwend + English Version + Steam seems to be pretty rare (as you probably noticed);
could have taken a while to get help
the combination of Arktwend + English Version + Steam seems to be pretty rare (as you probably noticed);
could have taken a while to get help
Profile - ntblood
