I just posted a thread about it here
, but I have created fixed HUDs and menu backgrounds for all the common widescreen resolutions at which KOTOR is able to run.
Get them here
It's described in the link above, but for people like Richard Blaze who have lower resolutions screens where the game either crashes or has missing conversation text, I suggest using video card drivers to setup a custom resolution higher than your display actually supports, and the turning on video card scaling. Run the game at that higher resolution and it will be downscaled to your native resolution, allowing you to play the game ok. Since your downscaling and not upscaling, the blurring is minimal.