How do you use a lute in Morrowind?

Answer 1

You can't. It's just another thing they put in, like the fishing rod or basket, to either have or sell. They don't really serve any purpose except to sell.

Originally in morrowind you cannot play the lute.... However if you are playing the PC version you can download the offical mod that enables you to 'entertain the patrons' at the Eight Plates bar in Balmora. There you can choos to play the lute and sing (you must have a lute and good personality to succeed playing a song). This action is only narrated in the dialogue box - you do not physically play the lute. Depending on the success rate you will be given gold as a reward and sounds from the audience will respond accordingly. You can only entertain the patrons once a day. Or you can download Better Lutes or Complete lutes. Better Lutes adds several lutes to Caldera that you can play while holding. Complete lutes adds a bard sitting in Vivec Arena Pit that sells the player a lute and sheet music to play.