I despised Malak because he was so two-dimensional and greedy. I used that word properly because that's all he ever was. I enjoy getting rid of him at the end of KOTOR and... I just despise the character. He acted like Darth Vader, but he had no tragic past that lead him to the darkside. He was just just a plain fallen jedi with a lust for making himself seem more important than he actually was.
Nilhilus was different... the fact he was faceless and mute was much more intimidating. Malak was loud and obnoxious... Nilhilus was a silent death. I think his character could have been so much more, but the story didn't make him the 'ultimate villain' in KOTOR II and they missed the chance for a very different enemy from the standard 'all powerful sith lord.'
Yes, KII could have done so much more with Nihilus. I was actually shocked when I fought Nihilus before Sion - I thought for sure Nihilus would be the ultimate enemy at the end. There was just so much left untold.
I remember playing KII for the first time and after defeating Nihilus, I was fairly disappointed, because The only thing I knew or saw of hi was found in that cut scene with Visas and the confrontation. Oh... and that little that Kreia told me about him.
Yeah, I was disappointed too. There was a lot of great potential story-line with Nihilus that just wasn't unearthed (unmalachored?). As for the question from the OP though, I still liked Nihilus more than Malak, because Malak is a douche.