The only time KOTOR lagged on my PC was on Mannan, at the place where there was some lights near the prison cells.
And when the grenades exploded.
But I've noticed that in every game i've played and there are smoke effects, probably the Geforce 2 go is a crappy graphics card. And since it is on a laptop I can't do anything about it. except waiting for another 10-12 months until I get a new PC.