@OP: Did you try setting swkotor2.exe in compatibility mode for XP?
Edit: I feel silly; I found the answer to my question in your original post. Incidentally, I discovered a new way in Windows 8 to set .exe files in compatibility mode. (Had to use this method to get my copy of 3ds Max to install correctly on Windows 8.)
1) Right click the exe.
2) Click Troubleshoot Compatibility
3) Choose Troubleshoot program
4) Choose The program worked in earlier versions of Windows but won't install or run now
5) If it doesn't show XP as an option, it should at least have the option of Previous Installation of Windows (or something similar). Click either of those two, depending upon which is present in the list of options.
6) Click Next
7) Click Test the Program
8) If it worked, click Yes, save these settings for this program
9) To exit the troubleshooter, click either Close the troubleshooter
(in the list of choices) or Close
(on the bottom).
Let me know if that works.
Originally Posted by Q
KotOR 2 makes my Nvidia drivers crash on occasion.
I've never had a crash on my Nvidia GPU; in fact, it seems smoother than back around my first encounter of XP.