I used to have that same problem.
Disable shadows and grass.
Go into your SWKotOR directory. (Start, computer, C:/, program files, program filesx86, LucasArts, swkotor, click compatability files at the top, and you should see a notepad document called "swkotor" or "swkotor.ini") And in your swkotor.ini, add a new line under your graphics options and type "Disable Vertex Buffer Objects=1" without the quotes (it's the Kashyyyk & Undercity & Dantooine lag fix, in case you're wondering what the new command does).
Last edited by thejman217; 09-02-2012 at 12:56 AM.