"Doesn't work for me though ... damn my system."
Odd, I am not sure how it could not work, by placing the atioglxx.dll in the KotOR2 directory it overrides you system drvier.
What driver are you using in your main system?
Also are you sure you have the 4.11 version (your putting in the X:\KotOR2) extracted correctly?
Does your ATI card have known conflicts with the 4.11 driver?