I'm actually having this same problem.
I'm running XP, I've got the 1.0b patch installed (but it happened before I installed that) and I'm running an nVidia GeForce 7900, 2GB of RAM, etc, etc. I've run KotOR and KotOR 2 on this machine before and I run Dragon Age and so forth on it. I noticed that when I go to configure, it tells me I meet the required system requirements but not the recommended requirements, and it complains that my card is the weak link (which, again, is strange because I can run far more demanding games on this machine).
What gives?
EDIT: When it was working before, I was using an ATI card and I had all the standard problems on the Dantooine level until I used DVBO in the .INI file. But right now, the thing won't even load and I don't understand why.