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Grimfang.120: nope Im in the same boat as Mont3core only bought the game a couple of hours ago and have the same exact problem and have completed KOTOR 1 several times without changing anyting

I just found a solution that worked from the thread on KOTOR 1 I deleted the atioglxx.dll file and it run straight away no crash after character creation or anything, funny that I didnt have to do it with 1 but I have to with 2. Now to see if it works when I re-install to get the movies back :)
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xdoasx: This. So much this. DO NOT GET RID OF THE MOVIES, THEY ARE NOT THE PROBLEM. I just searched in my game file for the atioglxx.dll that he/she is talking about, found it fast and deleted it. Game started immediately with no problems.

THANK YOU SO MUCH!
Hey! this worked for me