Well, in Kotor 1, you'll see a small ">" appear. If not, maybe you don't hit the right key.
I noticed that depending on your keyboard configuration, said "~" will vary. Not sure what exactly you should do to get it to work on the 1st time, because there are so many keyboards out there, however I'll tell you this: depending on what country you are, the keyboards appearance may vary. Likewise, you might have a keyboard configuration that do not have the tilde(or you do, but it doesn't work with kotor). Then, you might want to change your keyboard config just for your playtrough with kotor. Play around and it's bound to work. I think I was able to make it work when I used the English-USA keyboard config.