The absurd comment was yours. You said Tamriel was a planet, and now you're getting confused. The races belong to separate provinces which hold their own cultures.
So what? You didn't say any foreigners in a province, you said:
None of the races are foreigners to Tamriel. Just as none are foreign to Nirn which is why the statement is still nonsensical regardless of what you were actually trying to say. But lets move on from poor diction.
Xenophobia means basically one who is against foreigners.
No it doesn't. By its etymology xenophobia means fear of what's strange or alien to a person. It's a biological impulse that served our ancestors well before civilization by causing them to approach all new things with caution lest it result in injury or death. Xenophobia and racism aren't mutually exclusive because xenophobia can be based exclusively on on a groups ethnicity or ancestry, it just may not necessarily be so. Regardless of whether it is solely, partially, or not at all race based it's no less irrational and therefore no more laudable than racism and in the end it does little to differentiate how one evaluates the character of a person, especially if the xenophobia is partially or wholly based on race or ancestry.
When was it stated that they were segregated for their racial background by the game and not a Dark Elf?
The "game" doesn't state anything about anything except through the words and actions of others in the game be it through NPC dialogues and actions or books written by people of the Elder Scrolls Universe. Therefore there's no distinction between what the "game" tells you and what an NPC tells you. There is no objective basis to disqualify a statement because it comes from a Dunmer unless you can point to a statement from someone else that contradicts the notion, e.g.
"the Dunmer can live anywhere they choose to live in Windhelm, they just choose to live in isolation because they don't want to integrate into mainstream Windhelm society" (nothing like this is said in the game), a document written by someone else e.g. a book saying something to the same effect as the aforementioned made-up NPC dialogue, or the actions of an NPC, e.g a Dunmer actually living in another quarter of the city.
In the absence of contrary content what's said by NPC's is accepted as part of the lore of the games. One can argue why one thinks any statement of any NPC in the game should be considered unreliable but in the absence of actual contradictory game content to support one's notion much of the lore can be dismissed as unusable to support any conclusions about the Elder Scrolls universe. If you choose to insist on thinking that way that's your prerogative but that puts you outside the lore and basically outside any meaningful discussion about what's going on in the game.
Even putting that aside, one of the first people you can talk to as you approach the gates of Windhelm is the Nord Windhelm carriage driver who flat out tells you the Dunmer are forced to live in the Gray Quarter so yes, the Dunmer are subjet to a racial segregation law in Windhelm which can only be reconciled as non-racist if you also share the notion that the segregation of African Americans in southern America wasn't racist either.
They can be segregated for anything, but particularly because they're aliens to Skyrim.
The Dunmer are segregated because of their race. The Altmer, Breton, and Imperial citizens of Windhelm are no less foreign to the city thant the Dunmer. Claiming that non race based xenophobia is the basis for their treatment is roughly the equivalent of claiming that the racism displayed by the conservative elements in the United States against Hispanics isn't racism even though Hispanics have been well established and integrated into American society for hundreds of years.
And why are you comparing a video game story to the American segregation period?
I am comparing racial segregation to racial segregation. The fact that you would claim that it's not racial segregation based on covoluted flimsy arguments that have no support from the game content and are largely refuted by it doesn't change that fact no matter how hard you try to ignore it.
Or because they don't trust outside cultures.
Nothing in the game suggests that a cultural divide is what motivates the racial segregation of the Dunmer. The game content suggests the contrary as the mere segregation of the Dunmer with what basically amounts to their sleeping arrangements does absolutely nothing to comfort a distrust of outside cultures. The Dunmer are free to roam about Windhelm spreading their non-existent cultural contamination to the non-existent dismay of the local Nord population irrespective of the segregation policy. This is also why the statement:
The Nords have always been suspicious of them.
Is an equally toothless notion. Putting aside the fact that the Nords have not been historically suspicious of Dunmer (if anything the opposite is true because the Nords have a history of being aggressors against Morrowind, invading it several times without provocation) suspicious of what? The residential restriction does absolutely nothing to comfort suspicions that any Nord might harbor that the Dunmer may be doing something untrustworthy, as evidenced by the words of Rolff Stone-fist when you first enter through the front gates of the city.
It's part of persistent xenophobia.
You mean the nonexistent ingame non-race based xenophobia you've been advocating by pointing at nothing other than your speculation while trying to dismiss away game content that contradicts the same?
I don't think you understand that I was listing potential reasons for xenophobia; not necessarily every individual potential reason was going to be their trigger.
Then why list ones that are readily dismissed by the lore and require you to ignore it?
No, there's always a difference. Culture and race are different. If you cannot fathom that then... there is a problem. Culture is a product of a people. Race is a product of nature and evolution.
When the people that produce the culture are of a specific race and the culture is effectively viewed as exclusive to that race that's a difference without a distinction. If you can't fathom that then there is a problem. For example, Antisemitism has the characteristics of both racism and xenophobia because there is overlap between the two. Just as a Jew is a Jew and the object of hatred for all antisemites regardless of whether a Jew observes the faith or not, a Dunmer is a Dunmer and the object of segregation regardless of whether the Dunmer observes the cultural practices of the Dunmer as a whole. A Dunmer will never escape the restriction to the Gray Quarter no matter how "un-Dunmer" he or she may be in life solely because he or she is a Dunmer. While that may or may not have some root in none race based xenophobia, it is ultimately and undeniably based on his or her race and thus racism.
but there is a much greater chance the Stormcloaks are a bunch of xenophobes than racists.
The Stormcloaks as individuals may not even harbor any particularly xenophibic or racist characterisitics. Some may be fighting solely to end the rampage of the Thalmor in Skyrim and to reestablish the open worship of Talos. Notwithstanding that, because they choose to pledge their fealty to Ulfric, they're beholden to enforce his will. All of it, including what they might consider bad, along with what they may believe to be good and right.
Xenophobia, in case you didn't think this was possible, can continually persist and be passed through generations.
That kind of xenophobia is only sustainable as racism. Unless you consider the multi-generational antisemitism of islamist extremists or the multi-generational anti-everything not white of the Aryan Nation and its ilk to be non race based xenophobia, your distinction is empty and meaningless. I challenge you to present one example of multigenerational xenophobia that doesn't rely upon hatred of either ethnicity or ancestry to sustain itself.
Pointing out that the positions of....
...a person with a different opinion and formulated view of everything gathered from ...
...his ignoring what the game presents to him and fabricating his own independent alternative and contradictory version of what is going on in the game aren't perusasive and don't refute the actual existence of racist characteristics of an NPC in the game isn't obsessive regardless of puerile attempts to claim it as such. If you don't like the idea of having your subjective opinions that are borne purely by your inner speculations picked apart as such when you try to advocate that they are anything more than that then don't post them. Otherwise they're fair game for open criticism.
Ulfric is not at fault for the conflict between the Graymanes and the battle-born. Theirs much more too then politics that broke up the relationship between them both. Olfrid Battle-Born got rich and decided to get himself some new (wealthy) friends. also at the beginning Idolaf Battle-Born is seen requesting armor and weapons for the imperial army. It was a big order. The woman blacksmith told him that she wasn't able to carry such order, and that she told him to go to Eorlund Gray-Mane. He refuses to contract Eorlund Gray-Mane for the job, stating that he would "sooner bend his knee to Ulfric Stormcloak." So I guess he doesn't want quality armor for the imperial army after all. As far as refusing to do business with the woman blacksmith because shes a redguard I don't buy it. People want quality, and Eorlund can do exactly that 
