First time here. I've recently been having issues wherein Steam tells me Morrowind is still running, even when it isn't. I've checked Task Manager and Morrowind doesn't show in the "Processes" tab, I also tried running it from the Morrowind launcher itself as ad admin, and it tells me that InstallShield Engine's iKernal executable's class couldn't be found. Some assistance would be appreciated.
Try adding the Morrowind executables as exceptions to your anti-virus software (and firewall).
Cross-referencing both issues (Steam thinking the game is still running and the InstallShield Engine iKernal (unregistered) class problem) that approach is what they have in common.
Another option is to run Morrowind using Windows XP compatibility.
Is the game folder for Steam in the Program Files directory? That can have some issues with Window's UAC (User Account Control) and should be avoided if possible.
If the issue is not related to a firewall like the other commented suggested and is instead a hardware/software issue, you may want to consider trying OpenMW as a modern engine replacement for Morrowind, or using a tool like the Morrowind Code Patch (get the 2.5b4 patch here) to help make the game significantly better performing and much more stable on modern systems. Either of these is a significant improvement from just running in compatibility mode. If your issue is a compatibility issue, then either of these should fix it.
You could also try disabling the Steam Overlay for Morrowind, but most suggestions that this causes issues have been debunked as little more than rumor. Still, easy to try out.