http://bugs.winehq.org/show_bug.cgi?id=4919
--- Comment #15 from Edward vbgraphix2003@hotmail.com 2010-02-24 21:36:46 --- Ok, it seems the KMS problem is actually related to this:
http://bugs.winehq.org/show_bug.cgi?id=21515
It can be fixed by following those steps and/or patching wine according to the discussion in bug 21515, but the drivers and kernel kms isn't quite to the point of being ready.
Though the error that I am currently running into at least has a kernel patch already. Perhaps kernel 2.6.34 will fix morrowind on open drivers!