I hear this quite a lot and no one has ever been able to explain it to me. Every argument I hear for it pretty much boils down to "I don't like it, so it's impossible". Biology is not my specialty, and digitigrade bipeds do exist (they're called birds), so why is it anatomically wrong for upright creatures to be digitigrade?
Birds don't walk upright, except, arguably, penguins, which have a plantigrade foot. Still, it's not the same, as penguins have more of a squatting posture.
If the khajiit and argonian bodies were built more like the werewolf and they spent part of their time walking on all fours, that leg structure would make sense.
By the way, I happen to think beast legs look cool, and I wouldn't have complained if the devs had done them. I can accept either type. I was just pointing out to the OP, who seemed concerned with realism, that they aren't realistic on the Morrowind khajiit and argonian.