Sorry for not responding sooner.
I notice from the screen shot... you have your game installed to the "Program Files (x86)" folder. With Windows Vista or Windows 7, to my knowledge, this is always a bad thing with either the "Program Files (x86)" or the regular "Program Files" folders. With regular programs, I've never really had a problem installing there. But games tend to have problems being installed there because of the higher security that windows places on those folders. So what you need to do is uninstall the game (I know... painful ) & reinstall to a completely different location. For example... I have my game installed to this location:
C:\Games\LucasArts\SWKotor2\
I created a default "Games" folder in my c: drive & out of habit now... I install all games to this folder. Even programs like Steam & Impulse are installed to that folder as I just don't want to deal with Windows security issues.
After you've done all of this... try this fix again and tell me the result. Also, as far as the shortcut is concerned... it looks fine to me. But if you want to be absolutely sure... go to the folder where the game is installed (that's after you have uninstalled & the reinstalled to a new folder) & find the swkotor2.exe file. Right click on the file & choose "Create shortcut" from the drop down box. Then edit this newly created shortcut with fix.
I hope this helps.