I appreciate the reply Thor110! As for the Kotor Tool: Inventory Editor, this is how it looks like when I'm trying to add armor to an NPC. I simply dragged the item I wanted from the list on the left to the appropriate slots on the right. It worked for the armor but not for the headgear. I've never tried the K-GGF method before but I'll give it a try once I installed the software.
Thanks for replying DarthParametric! I'm not too sure whether the head model that I used is part of the playable PC heads. I'll give it a check and test out what works!
Update 1: I can confirm that the head that I used is indeed a PC head and am able to equip the headgear in a playthrough, despite it not working for the NPC. I will proceed to try the K-GFF method. If nothing works then so be it lol.
Update 2: Brought over the utc file that I edited via KOTOR Tools to K-GFF editor and this is what it looks like. The item code for the head gear is already intact (g_i_mask03), even though it doesn't appear on the NPC in the game. So the question now is: Do NPCs in KOTOR 1 even wear any of the in-game modular headgear? We know that in KOTOR 2 they do.
Conclusion: Perhaps NPCs in KOTOR I aren't meant to have any headgear on. I do not recall any ever wearing one, except the ones that comes as a whole set, ie. Mandalorian, Sith Trooper, Imperial Officer, Republic Trooper, Dark Jedi (with the Hood), ect.