Good question.
I'm half-known of these bug since 9 days waiting and solving of this bug.
KotOR2 *REALLY* needs OpenGL1.4 compatible Graphic Cards to run fine for their Lightning and whatever suxking weirding effect could run on them.
This effect wasn't found in KotOR1 and only found in KotOR2 and this's the point why I and everybody that has onboard cards or some of ATI cards (eg. Radeon 7500 or such) couldn't play it until he/she upgrade their cards.
^Yes, that's it!!!
Unfortunately, someone like me who play in laptop, and their cards can't be upgraded... I'm here waiting for patch to do something with this issue. While collecting my money to buy new desktop and play it next year....
Hope you all find lucks more than me.