n truth, the thing is that where other games might use a more complicated method to animate textures, KOTOR doesn't. Aside for the texture, you'd need this in the TXI file:
defaultwidth XXX(replace XXX with width of one frame)
defaultheight XXX(replace XXX with height of one frame)
numx X(replace X with how many frames horizontally)
numy X(replace X with how many frames vertically)
fps XX(how fast the frames should animate, should be an even number)
For the size of each frame, it should have the size of say:
1024x1024(likely not any higher than this, since even this size might cause the game to lag, unless you only intend on two frames with this size)
As for the texture itself, it should have a number of instances of the original, and only an even number of them. Once this is done, you need to make changes to the frames, which the game will switch between, making the animation.
The game itself does use this in a few places, but it is mostly low res, usually for monitor screens and such.