There was a role playing game from the early-mid 90s I remember
playing on my friend's PC. It was anime themed and had some adult
themes, but was very Final Fantasy-ish in nature.  I thought the name
was called "Knights of Xanthar" or something like that, but a search
yeilded negative results.  What's the name of this game?

Hello oregonjon-ga,

Thank-you for your question.

I believe the game you are referring to is "Companions of Xanth" which
was released by Legend Entertainment Company in 1993.

There are a few reviews of the game on the internet such as these:
http://www.xanthians.com/mini-CoX.php
http://www.justadventure.com/reviews/CompanionsXanth/CompanionsXanth.shtm
http://www.quandaryland.com/jsp/dispArticle.jsp?index=143
http://en.wikipedia.org/wiki/Companions_of_Xanth
http://clusty.com/search?query=%22Companions+of+Xanth%22

I hope this is the game you were searching for, it certainly seems to
match most of your criteria.  If it isn't or if you require any
further assistance please ask for clarification.

Knights of Xentar

A console-style "hentai" RPG, originally released as "Dragon Knight III" in Japan.

The following link has a lot of information:

http://members.chello.at/theodor.lauppert/games/xentar.htm

Also, 2 copies were available for sale at Amazon, at this link:

http://www.amazon.com/gp/product/B0009F1M3A/ref=sr_11_1/102-2349967-1637754?%5Fencoding=UTF8&v=glance&n=468642