To enable screenshots:

1. Open your "swkotor.ini" file located in the game's root directory "SWKotOR".

For TSL, look for "swkotor2.ini" in the "SWKotOR2" directory

2 under [Game Options] change the 0 for a 1 in the EnableScreenShot line so you end up with this:

EnableScreenShot=1

Save your file and make sure it has the ".ini" extension and not ".txt".

You can hit the print screen key (normally a key located near the top right corner of your keyboard - on an English Keyboard it says "Prt Scr" sometimes but this may vary with the keyboard manufacturer)

Pasting your image in Paint will do.

Personally, when I take a series of screenshots, I like to use Reclip: http://lockettefamily.com/reclip.htm) or FRAPS

Note that the game will also output your screenshots in .tga format in your swkotor (for Kotor 1) or swkotor2 (for kotor2) directory.

Other possibilities (thanks to ChAiNz.2da for reminding me of those):
EDIT: and I need to thank Kitty Kitty for being the 1st to post them. I just dug them up :D ~ ChAiNz.2da

(note: you still have to do the steps described above))

1. Adding GUIsInScreenShot=0 under the [Game options] header will allow you to take screeshot without the gui icons and such appearing. It makes cleaner shot and is very useful for creating icons for mods.

2. If you add the following command in the swkotor.ini file, the player will be able to toggle between Full Screen and Windowed mode:

Under the [Graphics options] header, put this line:

AllowWindowedMode=1

To 'toggle' the mode press Alt+Enter.

By ChAiNz.2da:

For some reason, when you do this, it will refresh the game's graphics. It really helps when tweaking re-textures/skins as you can see your results within a few keystrokes. Again, helpful for the modders