Morrowind "ancient"? I'm not sure what to think of that. It's a pretty modern 3D game, and Bethesda still uses a permutation of that engine (fortunately somewhat better optimized).
If you want at least a little bit older, play Arena and/or Daggerfall. Especially the latter has a big fan following, and both games are still easy to install on modern machines. Plus, they are free. If you want ancient, play the Ultimas.
Regarding the newer Bethesda games, yes, they have factions. Morrowind had 15 joinable factions in the base game alone, plus some others you just made a few quests for (in newer games, these would have been joinable). You couldn't join all 15 at the same time, as there were restrictions, something Bethesda decided to toss in later games. These restrictions were relatively mild, and you could circumvent at least one of them, but Bethesda still tried to have at least some roleplaying in there. In later games, factions didn't matter to the outside. This is the kind of dumbing down I'm most unhappy about, as it stresses how artificial the world is.
I'm not sure about your use of the word "epic". Actually, Morrowind's plot is very epic, in the actual sense of the word. It's like an elaborate Greek drama, with gods and demigods playing a part, and you are not quite sure who the real villain is. Dagoth Ur as the betrayed one is quite an interesting antagonist. Maybe you don't like that you are the tool of a petty revenge and responsible for the destruction of Morrowind. You know, "epic" doesn't need kalpas. This "epic" is subtle, not like Oblivion's bold and stupid. It also makes fun of the concept of "hero".