Well, In response to my own prob and to anyone else who may encounter it. The FPS spikes I was getting on the station above Telos were after a area load. It was random. I would go through 3 areas and then the 4th would have the prob. Reload area and it was gone. Very random appearance but only reload would get rid of it.
With the Dant. prob, that is just a carry over from the first game. What an irony.
I didn't have to disable the vertex buffer objects yet but I am not at Dantooine yet. Hopefully I won't but I did have to do it in KoTOR I so I suppose I will have to.
On another note, the copying of the 4.11 ATI GL driver to the KoTOR II directory does the perfect fix for issues with KoTOR II. Although when I tried this trick with KoTOR I, it would give me serious graphics corruption.