Regarding KOTOR, the near non-existent performance is probably due to the fact that it is not compatible with Win 7. There is a fix for for it somewhere on the web though. I recall playing it with a Radeon 9250 back when it 1st came out. The nVidia 9400GT is definitely more powerful than that card.
The best video card you can install given your 300w PSU is the Radeon HD 7750 for around $110. If that's a bit rich then the Radeon HD 6670 should go for around $70 (less if there's a rebate).
However, you have a PCI-e 1.0 or 1.1 slot in your old motherboard. The Radeon HD 6670 is a PCI-e 2.1 card will the Radeon HD 7750 is a PCI-e 3.0 card. There is not a 100% guarantee that a either card will work, but the chances of a PCI-e 2.1 card not being compatible in a PCI-e 1.0/1.1 slot is relatively small. As for the Radeon HD 7750... I simply do not know since I have not read anything about anyone trying to install a PCI-e 3.0 card in an old PCI-e 1.0/1.1 slot.
your better off with a system that old to upgrade it. if your using photo shop for work or income talk to your cpa about writing off a new computer as a biz expense.if not look to see if you can get a donation cost on your old pc that you can write off on your taxes. you find that the newer sandy bridge and or amd system are a lot more faster with photo shop then your old pc is.
most pre built system have under sized power supplys 300-400w in size. there ok for mini pc with low end video cards.
plus side if something fails on a pre built or you having software or driver issue there someone or someplace to turn too.