I'm playing Knights of the Old Republic for the first time and after hearing about flexible it is with playstyles I decided to make a persuasion/charisma based on character. At the character creation screen all of my points went into "mental" areas so I'm great with persuasion, unlocking things/etc and my character is naturally stealthy as well. Now I've landed on Taris and I (and Carth) can easily take on the enemies (so far) on the upper/populated parts of the city but enemies like the gangs in the lower part of the city or the first opponent in the arena absolutely crush my character.

Have I already run into a brick wall and need to restart or will I be able to sneak around and rely on Carth long enough to find a combat suited companion?

Well, at some point you don't really need any more points in charisma, but having an edge early on is good for those persuasion options. The arena is a problem and no two ways about it. You might want to level a couple more times before trying again, but I'm not sure if it's at all possible to beat all enemies with a Scoundrel build without getting to Level 7. You'll have to do a fair bit of kiting and even use stims, shields, and grenades.

As to the gangs, they should still be manageable. You've not hit a brick wall, just try to be more strategic about it. After this initial rough patch, there will be plenty of easy encounters, so enjoy it while you can.

Thanks for that info! I suppose I planned on making this character a "diplomat" character (using the Scoundrel class) and using blasters, but they (the blasters) don't seem very effective, but they do at least give breathing room with some enemies. I'll just work on getting better for the moment instead of rerolling, thanks again!

Nah, blasters are fine. There's a particularly good one, an Arkanian Heavy, sold in the undercity. The only weapons that were left under-developed were the heavy ones. In the meantime, Carth is a beast with blasters. Also, try to get stuns and crits if you can.

As to diplomacy, unfortunately, KotOR isn't very good at it. In fact, as an RPG, I tend to think it's rather bad. There's very few situations where talking will spare you a fight, or where you'll even want it to be spared.

Yeah that's fair, I guess when i said they don't seen very effective I was referring to using them on the gangs, they were fine on the patrol in the apartment and the thugs in the Uppercity. I'll work on getting perks for the blasters, and getting my criticals up. Understanding that I left the physical stats alone during character creation, is there any chance that melee weapons will be at all useful (without spending all my perks on them)?

Good to know, I honestly expected that you would be able to Jedi talk (haha) your way through a lot of the game sort of like Vampire The Masquerade: Bloodlines.

Oh certainly. Mind you, you've probably put yourself into a corner where Carth needs to be your tank, too, so he might have to pick up the mêlée slack, if necessary. I'm not sure how feasible the entire game is with guns (i.e. the final boss, whom you face alone), but you should be fine with blasters.

For the Taris gangs, I seem to recall that one of the tricks was targeting the person with the stun prod. Also, feel free to use whatever grenades and shields you need.

Scoundrel - > Consular
Blasters (dual wield pistols)
Force power: Stasis field

Profit

KotOR is one of my all time favourites, and I have beaten this game many, many times... I tried every class combination possible over time, light and dark side.
So I can safely say, that everything is possible. I just played it once again, with the GOG version, as a Scoundrel and later Jedi Guardian. No problems there. Although this combination is difficult to play, it is not impossible.

I always preferred the light side and diplomacy over fighting to resolve a conflict, so I can assure you that there are hundreds of discussions, where persuasion will help you. I think it is an absolute necessity for a light side character, to be honest.

Now, of course this game is rather complex in terms of skills (at least for a beginner) and can therefore easily lead to frustration. For example, putting your skill points in mental areas only doesn't make any sense.
I find this guide to be one of the best around, everything you could imagine game-play wise can be found there. It is tough literature though, so be prepared to spend some time on it.

But, in the end, I wouldn't worry too much about it. The game actually isn't that difficult on normal settings. If you find yourself in an too hard game on your first run (trust, more will follow eventually), just lower the difficulty. There is no such thing as shame regarding this, anyone telling you anything different just fools himself.
Or you could start over, of course, and choose another class (but only scoundrels can use persuasion on Taris).

Hm, quite a wall of text. Well, you'll be just fine.

Fun fact about the arena: It's fairly easy to cheese it.

Found that out after making a horrible scout build that was pretty much mediocre at everything. Just kite them at short range with a blaster. They pretty much stay in melee mode the whole time.