Yeah, you just have to keep trying your spells. Everytime you are successful, your xp rises. Like BigJustinW said, enchanting is really really good. An enchanted weapon certainly makes up for any weaknesses as a warrior.
Once you get some money, I think you'll find that you just buy most of your skills, lol. I maxed out every skill as far as my attributes allowed by buying them all.
I don't know how you're playing the game (a good law abing citizen or whatnot) , but there's no harm in killing a shopkeeper or two and stealing all of their wares.....just as long as nobody sees it, lol. Save anytime you do something of questionable nature (like killing a shopkeeper) cuz you never know if the gaurds will see it or something else happens.
Creating a new character is smart. Once you start playing with your first one you'll see more of what you really want to be as you do a couple of quests.
Myself? I started as a one of those lizards (forgot race names) and as a mage. I actually never looked back, I played the whole game with my first character. It actually was to my disadvantage later in the games being that race (Argorian was it?) cuz a lot of people don't associate with the beast races. Bastards, lol. But then I just bribed the hell out of them and then they would talk to me. Spent a lot of money just for that purpose.
If you're traveling the path of hte mage, I would suggest getting into Alchemy. It can save you some money if you create your own medicine stuff. Alchemy can be quite frustrating though, so be aware of htat.
I almost forgot about plug-ins. You should go to
www.morrowind.com and download the plug-ins. They're basically little diversions from the main quest, but they can be quite fun.
Damnit, now I really want to start playing this game again.