For those of us with dual-core, KoTOR and KoTOR2 are still two games that exhibit problems with nVidia's dual-core optimizations. So, in the 81.98 drivers, nVidia implemented an option to disable dual-core optimizations. Unfortunately, the setting is currently a registry hack, and it's not documented properly in the driver release notes, so I'll list my own instructions here.
First, in the registry editor of your choice, go to:
HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Contro l\Video
Here should be one or more {CLSID} entries. The release notes file on nVidia's site suggests a way to find the correct one that led me to the wrong one, so here's the way I did it.
Systematically go through each one until you find one with a sub-directory 0000 that contains lots of entries. The first entries should all be entries related to game .exe files (game profiles). In my system, there was only one of these (and I have an SLI system), so I suspect if you have more than one, it is due to an unclean driver uninstall at some point. All other {CLSID} entries only had a couple of configuration settings.
Now to enter the new DWORD values. To do this, make sure you are in the 0000 subdirectory of the proper {CLSID}, then right-click and click new->DWORD value. For OpenGL, name the DWORD "OGL_ThreadControl" and set the value to 2 (KoTOR and KoTOR2 use OpenGL).
For D3D, name the DWORD "WTD_ExecModel" and set the value to 0 (this won't do anything for KoTOR, but just in case you find a D3D game that has a similar issue).
You can view the 21st page of the 81.98 release notes for the official instructions.
(edited for clarity)