Merchans "restock" their cash if you rest or wait 24 hours. You can wait for 24 hours in front of the merchants, if you like.
Morrowind is the kind of game where you can ruin quests by accidently, or intentionally, killing important characters.
As far as I know, you get a message if you kill any essential characters for the main quest but it's certainly possible to ruin faction quest by going on a killing spree. A good advice that will get you far is this: Don't kill anyone who isn't attacking you first. There are many exceptions to this rule, but unless you've played the game once, you don't really know who's safe to kill and who isn't.
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Nothing is impossible, it's just a matter of probability.
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