Pretty sure OP already installed it following those instructions.
Both games are really old and can't recognize newer hardware, drivers or versions of Windows newer than XP. Most of the time you can safely ignore the video card driver warnings and failures.
GameVersion=v2.00.424 - This usually indicates that your game isn't patched. If you have installed the patch with no apparent errors, just go into your game folder, right-click on swkotor2.exe and select "Properties". Look for the file version under the "Details" tab. If it's 220.127.116.11, then you should be good to go.
As far as the lag is concerned, your video card is the weakest ATI card of its generation, so you should expect some lag, but not what you're experiencing. Then I noticed "Anisotropy=16". Turn that down to 4 and it should run better. You might even be able to run it with high texture quality, frame buffer effects, shadows and grass. Anti-aliasing and anisotropy are usually what cause most of the lag. Just play around with the settings and see what works best.
"They should rename the team to the Washington Government Sucks. Put Obama on the helmet. Line the entire walls of the stadium with the actual text of the ACA.
Fix their home team score on the board to the debt clock, they can win every game 17,000,000,000,000 to 24. Losing team gets taxed by the IRS 100%, then droned."