Wasn't Kotor 1 more for Win98 than XP, I would try going to the executable file and run it in compatibility mode, let Windows 7 choose what mode to give you.
Also, even though the game is old (loved the game btw), I would uninstall and install fresh drivers (video and audio) as sometimes they get corrupted when installing games and/or multiple crashes occur. Of course this is not 100% guaranteed to happen, I am just going by experience and the fact that it only costs me a few minutes to do this.