After this, the in-game movies should play smoothly, and the game itself shouldn't twitch, flicker, or crash as it might otherwise on Windows 7.1. Locate the game directory for KOTOR. If you installed it through Steam, as I did, it should be in x:\Program Files\Steam\SteamApps\Common\swkotor.
2. Once you've located and opened the game directory for KOTOR, right-click on swkotor.exe, and select Properties.
3. Click the Compatibility tab of the Properties window, and check the checkbox at the top, labelled "Run this program in compatibility mode for", and make sure Windows XP Service Pack 2 (not 3) is selected.
4. Click the last checkbox on the page, labelled "Run this program as an administrator".
---
I decided to start with a Soldier for my first run-through, with Two-Weapon Fighting as a bonus feat. Of course, it'll be useless until I at least get the Improved version of said feat at level 4, but I'm planning for the future here. I'm just about to go through Taris - amusing, since I just began the Taris: Bonus missions with my new Jedi Knight character in the SW:TOR MMO.
Finding the crashed Endar Spire in the MMO was amusing, considering the timing of me just getting KOTOR working.