This is my attempt to place the 100% chameleon spell effect on an item the player would get during normal playing rather than make a completely new item and place it in the world.
Specifically the Ring of Surroundings, as I found the default chameleon effect (20-30%, according to the game's wiki) on it to be insufficient for my thieving character.
Mod compatibility and how to get the ring:
Since the mod affects what's otherwise a game default item (the Ring of Surroundings), it won't be compatible with anything that modifies the same ring.
I also only modded the ring, so you'll still need to complete the "Larrius Varro Tells a Little Story" quest to get it.
How to use the chameleon effect and how it works:
For the chameleon effect to work the player's character needs to have the ring equipped on their person, so to actively wear it. Just having the ring in your inventory will not work.
What chameleon does is make your character transparent and harder to detect as a result.
To get your character back to normal, just unequip the ring, so your character is not wearing it.
Talking to NPCs and detection:
If the player is wearing the ring, but not sneaking, the NPCs should talk to you normally.
Though for some reason my character could still be momentarily detected even with the ring equipped when her sneaking skill was at 40.
It seems to universally work with her sneaking at 50, but do keep an eye on the sneak icon just in case, so your character won't be reported for theft.
Other than that, I've not run into any issues so far in my own game.
And no, I don't know how to make the early sneaking more consistent. :(
To install the mod:
Download the 7zip file, extract it and move or copy the "Ring of Surroundings - 100% chameleon.ESP" to your Morrowind/Data Files folder and enable the esp file with a mod loader program, e.g. OpenMW (I tested the mod with the 0.48 version) OR by going to the "Data Files" via the normal Morrowind launcher program that comes with the game (e.g. in the GOG version of the game).
E.g. my installation path looks like this: D:\Games\GOG Galaxy\Games\Morrowind\Data Files.
Idea credits and an alternative mod:
The idea for such an item was inspired by "Ring of Extreme Dissapearance" mod found here, link: https://www.nexusmods.com/morrowind/mods/561/?tab=description .
The author field is blank, so I can't properly credit them, but I messed with the "TES Construction Set" program on my own rather than checking what the original mod did (in hindsight that might have been the more efficient approach XD).
The ROED mod would not load the ring into my game, so I made an alternative to it - grab that mod, if you'd prefer to add a new item to the game rather than have an existing item in the game be changed - so I couldn't miss a ring with presumably the same effect.