>>713570507I don't think it was ever mentioned in-game. I think the first mention of it was from the pre-release "Skeleton Man's Interview with Denizens of Tamriel" - basically a bit of promotional material Bethesda released in 1999.
"Xal, a Human Maruhkati, Port Telvanis:
The first to see him was the Shop Foremer, Kagrenac of Vvardenfell, the wisest of the tonal architects [Mechanists- MN] Do not think as others do that Kagrenac created the Anumidum for petty motivations, such as a refutation of the gods. Kagrenac was devoted to his people, and the Dwarves, despite what you may have read, were a pious lot-he would not have sacrificed so many of their golden souls to create Anumidum's metal body if it were all in the name of grand theater. Kagrenac had even built the tools needed to construct a Mantella, the Crux of Transcendence. But, by then, and for a long time coming, the Doom of the Dwarves marched upon the Mountain and they were removed from this world."
It's an out-of-game theory by a human mystic living in Morrowind. I think that the Xal-Gosleigh letters were originally supposed to be in Morrowind but they ended up getting scrapped and the idea repurposed in the Charwich-Koniinge Letters.