Well, the exact error report would really help...
However, two reasons why you can't save come to my mind:
1)not enough disk space - which would be really weird since savegames aren't big and disk space is really unlimited these days - it might be that your user profile allocates you only a certain maximum disk space to use - see below.
2)You don't have enough privileges to create file in the morrowind directory - users of windows xp can have different levels of privileges, ranging from administrator (you can do whatever you want) to illegal alien (you can only READ some files). Check that you are not an illegal alien and that you can actually create files in the morrowind\saves directory.
Otherwise, try to reinstall morrowind, the installation might have got corrupted somehow. Also get the latest drivers of your audio and video cards - it's unlikely that your problem is due to driver conflict, but latest drivers always help, especially with XP which is notoriously picky with driver versions.
P.s: 500 posts - changed that horrible avatar with another one, yet more horrible
[ 02-01-2003, 06:40 PM: Message edited by: B_part ]