ok i have figured it out i had the same problem but in a sorta diffrent way, i have xp service pack 3 and i downloaced the restoration mod and i wouldnt get passed the loading screen just like yours... i found out that you have to put the mssdll file from kotor 1's directory into kotor 2's. to do this press start and go to computer, c program files, lucas arts, swkotor, and find the file, then go back 1, and just put it in kotor 2 after removing kotor 2 mssdll file....
worked for me!