I think this is included in the Morrowind Patch Project, from the wiki:
"Originally, the corpse of Volar carried the Daedric Crescent and the Tel Fyr Amulet, which was supposed to bring one back to Tel Fyr. However, the amulet-scripting inside the game is bugged and actually freezes the game as soon as it is worn. Therefore the game was changed and you are transported back as soon as the Dremora drops dead. The weapon is simply put into your inventory, and the old amulet is removed. The dead Dremora was not changed and still carries the amulet and weapon.
PC Only This issue has been addressed by the Morrowind Patch Project; the amulet functions properly, although it does not vanish after use as originally intended."
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"Originally, the corpse of Volar carried the Daedric Crescent and the Tel Fyr Amulet, which was supposed to bring one back to Tel Fyr. However, the amulet-scripting inside the game is bugged and actually freezes the game as soon as it is worn. Therefore the game was changed and you are transported back as soon as the Dremora drops dead. The weapon is simply put into your inventory, and the old amulet is removed. The dead Dremora was not changed and still carries the amulet and weapon.
PC Only This issue has been addressed by the Morrowind Patch Project; the amulet functions properly, although it does not vanish after use as originally intended."