That's an odd issue. I think it stems from this.

The retail disc of Morrowind contains update 14...the exact same download everyone else gets who previously owned the game, whether they bought Morrowind or not. It's all the same software, it just provides your account different codes to open the content and perks. People who didn't buy Morrowind still have it in their system...it's just locked out.

Your PS4 is probably confused because it's not sure if you're trying to run the game from the new disc, the resident system software, or what.

You may delete the software off your PS4 if you need to, and it won't affect your ESO account. reInstall the software from whichever disc you want to use in the machine when playing. If you want to run the game w the Morrowind disc, delete from PS4 and reInstall game from that, then run a "check for update" when installed. Or, apply the Morrowind code to your account and continue to run from the old disc. It doesn't really matter.

Once you get the game booted from either disc, check and make sure the Morrowind content got added to your account. The easiest way to do this is to load a character, go into collections and see if they have any item from your Morrowind perks. For example, can they activate the dwarven war horse? Or even easier, can they travel to Vvardenfell? If either is verified, your account has been updated to unlock Morrowind...enjoy.