Ok, so here's what happened. Through trial and error, I found that turning OFF Catalyst AI caused a whole bunch of character models to disappear during gameplay. When I turned AI back on, the models reappeared. As for CPU Affinity, I found that turning on CPU Affinity for ALL four cores on my machine (Phenom II X4) actually cured the stuttering and slowframe problems, when used with the "Miles 2D Sound" option.

My only problem now is that all "non cutscene" movies won't play. That is to say, they aren't visible, even though I can hear their audio track.

I've downloaded and installed the latest RAD Video Tools software, and I tried running the game with the "Disable Desktop Composition" and "Disable Visual Themes" compatibility options, but nothing has worked.

This really doesn't make sense because the introductory "title card" movies (the ones that show the Atari and Wizards of the Coast logos) are also Bink movies, and I can see them just fine. This says to me that the problem lay somewhere in how the game switches from the "server/game" environment to an FMV player and back.

{EDIT}
Nevermind, I got it. It was all in the game's README. I quote:
"If you are having slow movie playback under Windows 98 or Windows ME
you can edit the "SafeMovie=1" entry in your nwn.ini file to "SafeMovie=0".
This will improve playback speed in-game but may introduce problems
where the sound plays but the movie's visuals do not. We mention this purely
as an option for the advanced user."

Switching it back to "1" got the visuals back. Turning CPU Affinity to "All Cores" fixed the stuttering.

I tried to change the file but when I try to save the nwn.ini file, it keeps saying my access is denied and I have administrator privilege on my system.

Copy the file to your desktop, make the changes there, save the file and then put the file back in the game folder.