You might have to turn that grass off though!
...and some technical sploogery from Spinorial:
The 32-bit version works better than the 64-bit one. Use that one, unless your OS prevents you.
The portable versions work as well as the installers.
You'll need to run the game several times to get it working properly.
You shouldn't need any special compatibility settings to run either one, though the setup requires some.
To set up a working solution, I had to set both swkotor.exe and FlawlessWidescreen.exe to Windows XP Service Pack 2 compatibility; FlawlessWidescreen.exe needed to be Run as an Administrator. With FW running, I needed to start the game at least twice because FW had difficulties reformatting the backgrounds and interface in one go. The first time you start the game, change the resolution to your desired one, even if it is already running in it. This will instruct FW to create new interface elements in the Override folder. However, these were still the original 800x600 resources, stretched. I needed to leave the game, then start it again. Now, FW was able to use its resources to copy new background images over the files in the Override folder, and the interface fits perfectly! I was now able to remove all previously applied compatibility settings from either programme. Once the game interface looks properly, it's a good idea to back up your Override folder. Getting a good set of working interface files has always been my greatest difficulty with KotOR.
One caveat to this method was that whenever I changed resolution, the game would revert to full screen. I was still able to use the process to create backgrounds at any resolution. Unfortunately, the in-game interface file only works in full screen; in a window, it gets cut off and is largely unusable.
Hope that helps someone at least.
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OR, you can use UNIWS - http://www.wsgf.org/article/universal-widescreen-uniws-patcher
Seperate instructions provided in this thread by MisterBlack: http://www.gog.com/forum/star_wars_knights_of_the_old_republic_series/widescreen/post25
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By editing a 1280x768 resolution into the swkotor.ini file under both [Display Options] and [Graphics Options] it appears to be running fine, fullscreen without any cut off of dialogue or anything else. if you test this method (particularly with any other resolutions, please report back on your findings! :)
NOTE: UNIWS Also works for KOTOR 2, however dialogues are cut off for resolutions under 1280x960.
Hopefully the guy that does Flawless Widescreen will maybe provide a fix for that in the future. I didnt have to do most of what MisterBlack suggests however, just run the UNIWS, find the install directory, set res and patch it, then change the settings in the ini file.