In an effort to spread this info around I've made posts on the BioWare K1 Official Tech Support Forums, sent a pm to Kristy Kistic for her forums, and from the TG thread it mentions someone put a thread about this on Obsidian's forum. I hope they stickied it there too. Also, I saw on KOTORFiles n the K2 section Utilities>Patches section there is a file called K2 Vista Fix. It might help too. Thought I'd pass it along. Glad I was able to help the community.
As for the DirectX thing I saw recently that there is a DirectX10 for both XP and Vista now. And I'm just guessing that since with compatability mode that since it's emulating in XP SP2 with K2, that it must be emulating DirectX 10 as if it was running in XP SP2 mode.