So basically with both Kotor 1&2 i can get to the menu(have to delete atioglxx.dll from the game folder to start it) but when i go to load a level after creating a character the loading bar will get almost right to the end then crash
Do you have intel video card? If you do, you can check out this thread: http://www.gog.com/forum/star_wars_knights_of_the_old_republic_series/kotor_ii_and_intel_hd_solution
Also, you can try disabling Vertex Buffer in swkotor.ini file, or running game in windowed mode - by editing the same ini file, and adding AllowWindowedMode=1 under Graphics Options (to make it work also edit FullScreen to be 0 in both graphics and display options).
Disabling the frame buffer effects in the option menu did work for me as well. Seems to do the exact same thing as editing the ini does.
Thanks for the help.