Just wanted to say that I am having the exact same problem word for word, I have tried a starting a new game and got the same problem the second time as well
IF this was created by the devolper as a counter measure to stop people with modified Xbox from playing their game I would hope that one of the devolpers would of stated as much by now, but I have been doing a bit of reading on the subject and IMO they just rushed the game out so they could cash in on Xmas sales and did not put the game through the proper QA testing that a game with NO LIVE support and no way to PATCH should have recieved.
IMO they should recall the game and rerelease it when they get it right (or at least release a version 2 of the game and allow people with version 1 to exchange it with Obsidian or Lucasacts picking up the tab for the exchange)
for what its worth the first hour had promise and I was enjoying it
Loved KOTOR 2nd best game on Xbox