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1. Yes! Stealing is one of the easiest things in Morrowind.
4. Yes, but it's really difficult to pickpocket. And useless too.
3. Sneak is what you use to go by undetected (and backstab), security is the art of opening locks and disarming traps, acrobatics that of jumping high and far (useful when you must escape, mercantile the art of selling high whatever you stole and buying low whatever you cannot steal. These are basic requirements for a thief.
Then you need a weapon proficiency (I suggest long blade), and an armor skill (I sugegst light, allows you to carry more loot).
Hand to hand and speechcraft aren't that important, so I suggest you build your own sneak oriented custom adventurer instead of choosing the built-in thief class. This way you can choose two other more useful skills (suggestion: mysticism, athletics)
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Never attribute to malice that which can be ascribed to sheer stupidity
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