The gamma in KOTOR 2 is really wild. Sometimes it'll start the game with a setting not specified in the ini or it will return from the game and set your desktop to a strange gamma level. I myself have only the problem with the game occasionally setting itself really dark.
If the game is too dark/bright: From the main menu or from the graphics options page, adjust the gamma one notch, then adjust it back, and it will be normal again.
If your desktop is too dark/bright: Yes, the ATI Catalyst drivers and the nVidia Forceware drivers both have a gamma control. Again, try adjusting it one notch, then returning it to default.