1) the installer to the CD opens when you insert close, and the application to be installed on the CD ("setup.exe" or similar) manually with administrator privileges and in compatibility mode with Windows XP (Service Pack 2) run. If the installation does not start (happened to me), the CD after ejecting the application starts (manually). The installer should now begin, simply insert the CD again and click OK.
2) After installation, you should use to start the game ("swkotor.exe" or "swkotor2.exe") looking in the game folder and set under Properties, that this also has administrative privileges, and in compatibility mode with Windows XP (Service Pack 2) is to be executed.
3) In the "swkotor.ini" or "swkotor2.ini" insert under [Graphics Options] the line "Disable Vertex Buffer Objects = 1" if it is not already present.
4) Kotor there is still the problem that the game when starting crashes frequently. This can be circumvented by the developer videos that are played at the beginning, rename or move. They can be found in the "Movies" folder in the game directory (biologo.bik, leclogo.bik, legal.bik).
There are about two games still a number of mods that you can then install, this is left to the individual. However, I would definitely for The Sith Lords Restored Content Mod to install, which extends the Obsidian massively abridged content to deleted story elements. In addition, as a precaution always save in several savegames! I hope my review helps you enjoy these great games to a large extent without any technical problems.