I haven't tried this cheat, but the tutorial from 2010 at
http://s11.invisionfree.com/KOTOR_Movies/ar/t1870.htmsays to Create a new line after "Disable Movies" and type EnableCheats=1
and the result should look something like this:
[Game Options]
[...]
Reverse Mouse Buttons=0
Reverse Ingame YAxis=1
Reverse Minigame YAxis=1
Combat Movement=1
TooltipDelay Sec=1
Disable Movies=0
EnableCheats=1
[config]
firstrun=0
At what point is it saying "I have it already?"
Do you mean you already see the entry for EnableCheats=1 in the swkotor.ini file?