I had to do the same with the federation faction. Didn't have the Xitaks.
If you are using Deathwynd's GD mod you will need to be sure that you don't have an excessive number of the old traits selected. 1.1 didn't seem to care but 1.2 doesn't like it if you select more than 5. I didn't have any problem starting a new game but I was unable to load a game using a modded faction until I fixed that.
1.2 broke a lot of mods (including a couple of personal mods of mine), so you need to see if there has been updates. I know DW's has been updated and others have as well.