It did that to me too. I think it's a simple clerical error.. probably when it reads its .ini file.
Anyway, there's an easy fix. Just open the tool, then click File > Manage Paths.
If you look close, you'll see the problem is, it's parsing SWKotOR and Data together as one folder name without the \ in between...
Sooo.. all I did was add a \ character to the top line (root path), and then I did a cut and paste on the third one (data path) making sure it DOES have the \ in the spot in question (which it did, but eh)..
Then I closed the path manager, closed the kotor_tool, and when I re-opened it, it worked like a dream.
Thanks again Fred. And I'm betting this "fix" workaround will be short lived.. cuz he'll prolly have it fixed in a day or two the way he's been going.