For future reference, DXDiag is unnecessary. I appreciate the effort, though.
My GTX 460 "fails" the hardware scan, too, but runs the game fine. The KotOR games are old and can't properly recognize newer video cards and drivers. Ignore it.
A few tips that might help your game run better:
1) Since you have a dual-core CPU and you're using XP, you're going to have set affinity to a single CPU core manually every time you launch the game. Before launching the game, open Task Manager (right-click on the Taskbar at the bottom of Windows' desktop and select "Task Manager") and click on the "Processes" tab. Check the "Show processes for all users" box if it isn't already and then launch the game. Once you get to the game's main menu, hit the Windows key to get back to the desktop and look for the game's executable (swkotor2.exe) in the Task Manager under the "Processes" tab. When you find it, right click on it, select "set affinity", then uncheck every box but "CPU 0" and hit "OK". Once you've done that, just hit the game's icon in the Taskbar and you should be good to go. Remember that you'll have to set CPU affinity like this every time you launch the game.
2) Set Fullscreen=1 under both "Display Options" and "Graphics Options" in the "swkotor2.ini" file, save and exit.
3) It might be a good idea to disable the intro ad movies by renaming their files. This is also handy if you just don't want to sit or click through them. These are located in the "movies" folder, which is in the main game folder. The files in question are:
leclogo.bik; legal.bik; ObsidianEnt.bik
In each case you can just change their file extension from "bik" to "bak" and they'll be skipped.
4) Widescreen hack:
Download the Squizzy Resolution Patcher
. Set your resolution to 1280x960 in-game. Move or rename the swkotor2.exe and Mss32.dll files in your game's main folder. Extract the file in the link to KotOR 2's main folder, and run the patcher. Choose your resolution and click on "patch". Then open the swkotor2.ini file, set the width and height values to your resolution under both "Display Options" and "Graphics Options", save and exit.
Then go to this page
and download the HUD fix file for your particualr aspect ratio. In your case you'll want 16:10. Unzip it and put it in your Override folder. If you still can't patch your game, you can just make a new folder in KotOR 2's main directory and name it "Override" and it will work. The HUD will look stretched and fugly, but there really isn't any fix for that.
"They should rename the team to the Washington Government Sucks. Put Obama on the helmet. Line the entire walls of the stadium with the actual text of the ACA.
Fix their home team score on the board to the debt clock, they can win every game 17,000,000,000,000 to 24. Losing team gets taxed by the IRS 100%, then droned."