PS:
@ Ghastley - You might need to make a small partition with a different OS to bypass the compatability issues, but ... if you DO begin modding in Morrowind, I am standing in line waiting for whatever you crank out to add to my game!
The better body mod made a huge diff to me, and the body looks decent nude as well. Not quite on par with Oblivion, but I was really pleased with the result (especially when compared to the vanilla).
Another thing - there are VERY few animations made for Morrowind that I could find. There is one for dancing and another for a "hug" type vampire feeding (that is actually quite good).
Princess Stomper said that to make the NPC sit you have to (on activate the chair) force them to equip a different pair of legs and hips that is in the sitting position - that is how the sitting is done.
I found a few of the "body bottom halves" to use, and am going to script some of the chairs in her house mod so she can sit in them.
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