I have an ATI 600XT 256Meg video card and I run Windows Media Center Edition. I started the game with recommended and supposedly SUPPORTED Catalyst 5.1 drivers installed and had many problems. By the middle of Peragus the game was virtually unplayable at any settings due to video based crashes. I then spent an hour removing any trace of ATI drivers or anything I could find to delete that was ATI. I then downloaded and installed the 5.2 catalyst drivers(6.14.10.6512) for Windows MCE.
The game is now much more stable now and there was only a couple of crashes that were video based and I think one was from going to my desktop mid game.
So the recommended 5.1 catalyst drivers are virtually worthless for KOTOR2 with my system. The 5.2 seem pretty good and I will update when I finally get to play some more.