Here's an extremely long answer from experts exchange. http://www.experts-exchange.com/Oper..._20281807.html
Or I can make it easier for you, use NTFS. As to reinstalling in a week I have no idea why gsferrari said that. You'll have to ask him. I don't reinstall a win xp after a week after the first install buy maybe he has good reasons.
NTFS vs Fat32
FAT32 is an enhanced version of the FAT file system that can be used on drives from 512 megabytes (MB) to 2 TB in size. The partition size limit is approximately 128GB. FAT and FAT32 offer compatibility with operating systems other than Windows 2000 and Windows XP.
FAT32 can be accessed by Win95B (OSR2, OSR2.1), Win95C (OSR2.5), Win98, Win98SE, WinME, Win2K and WinXP.
It cannot be accessed by DOS (prior to version 7.0), Windows 3.x and Windows NT 4.0 (without the use of third party utilities).
The majority of systems are formatted with FAT32 as the default.
NTFS (New Technologies File System) has all of the basic capabilities of FAT, and it provides the following advantages over the FAT and FAT 32 file systems:
File security. Access rights can be assigned to files and directories, allowing users full access, partial access or no access at all to data on your hard disk.
Disk compression. File and directory compression can be performed directly without the need for third party utilities, saving space, while allowing for transparent access and operation to the user.
Support for large hard disks, with a theoretical limit of 16 ExaBytes, and up to 2 TeraBytes (TB).
NTFS supports Unicode, and natively supports long file names.
Disk quotas can be assigned, limiting the amount of disk space users can access on a partition.
Encryption. The NTFS 5.0 file system can automatically encrypt and decrypt file data as it is read and written to the disk.
NTFS can be accessed by Windows NT, Windows 2000 and Windows XP. Note that there are some differences between the NTFS used by Win2K/XP and WinNT; you need to apply Service Pack 4 to Windows NT in order to access NTFS5.
Fault tolerance: file system journaling. See below.
Mounted drives: attach volumes to an empty folder. Operates much like the Assign command from DOS.
Hard links: create an NTFS-based link to a given file.
Sparse files: assign and reserve hard disk space to specific files.
File Streams: multiple data streams are supported and accessible with NTFS.
Each file system in depth:
The following limitations exist using the FAT32 file system with Windows 2000 and Windows XP:
Clusters cannot be 64 kilobytes (KB) or larger. If clusters were 64 KB or larger, some programs (such as Setup programs) might calculate disk space incorrectly.
A volume must contain at least 65,527 clusters to use the FAT32 file system. You cannot increase the cluster size on a volume using the FAT32 file system so that it ends up with less than 65,527 clusters.
The maximum possible number of clusters on a volume using the FAT32 file system is 268,435,445. With a maximum of 32 KB per cluster with space for the file allocation table (FAT), this equates to a maximum disk size of approximately 8 terabytes (TB).
The ScanDisk tool included with Microsoft Windows 95 and Microsoft Windows 98 is a 16-bit program. Such programs have a single memory block maximum allocation size of 16 MB less 64 KB. Therefore, the Windows 95/98 ScanDisk tool cannot process volumes using the FAT32 file system that have a FAT larger than 16 MB less 64 KB in size. A FAT entry on a volume using the FAT32 file system uses 4 bytes, so ScanDisk cannot process the FAT on a volume using the FAT32 file system that defines more than 4,177,920 clusters (including the two reserved clusters). Including the FATs themselves, this works out, at the maximum of 32 KB per cluster, to a volume size of 127.53 gigabytes (GB).
You cannot decrease the cluster size on a volume using the FAT32 file system so that the FAT ends up larger than 16 MB less 64 KB in size.
You cannot format a volume larger than 32 GB in size using the FAT32 file system in Win2K/XP. The Win2K/XP FastFAT driver can mount and support volumes larger than 32 GB that use the FAT32 file system (subject to the other limits), but you cannot create one using the Format tool. This behaviour is by design. Microsoft recommends using NTFS for partitions greater than 32GB.
If you need to format a FAT32 partition greater than 32GB, you will need to do it under Windows 98/SE/ME.
NTFS is the native file system that Windows 2000 and Windows XP uses.
Security is one of the most often touted advantages of NTFS: the administrator can assign various rights to each file and/or directory on an NTFS partition. Rights can be assigned according to individual users or groups of users, allowing or denying reading, writing, execution, deletion, and other attributes.
One key advantage of NTFS is that it is a recoverable file system because it keeps track of transactions against the file system. When a CHKDSK is performed on FAT32, the consistency of pointers within the directory, allocation, and file tables is being checked. Under NTFS, a log of transactions against these components is maintained so that CHKDSK need only roll back transactions to the last commit point in order to recover consistency within the file system. Under FAT, if a sector that is the location of one of the file system's special objects fails, then a single sector failure will occur. NTFS avoids this in two ways: first, by not using special objects on the disk and tracking and protecting all objects that are on the disk. Secondly, under NTFS, multiple copies (the number depends on the volume size) of the Master File Table are kept. The role of the MFT is critical in NTFS, and it is easily fragmented: regular use of a good defragmentation tool is recommended. Programs such as Diskeeper, PerfectDisk and O&O Defrag will do the job. The Defragmentation Tool that ships with Win2K and WinXP DOES NOT defrag the MFT.
Another key feature of NTFS is the ability to encrypt files and directories; this process is transparent to the user. Win2K/XP includes the ability to encrypt data directly on volumes that use the NTFS file system so that the data cannot be used by any other user. Files and folders can be encrypted by setting an attribute in the object's Properties dialog box. The Encrypting File System (EFS)is the file encryption technology Microsoft uses to encrypt data directly on volumes that use the NTFS file system. You can use the encrypted data the same way you use non-encrypted data. In addition, you can configure permissions for your encrypted data to prevent unauthorized use. Someone who does not have the correct permissions receives an Access Denied error message if they try to open, copy, move, or rename an encrypted file or folder.
NTFS also has a disk quota system, where disk space can be allocated to different users: again this is transparent, the user simply sees the disk space available to them. Administrators can limit the amount of disk space users can consume on a per-volume basis. The three quota levels are: Off, Tracking, and Enforced.
As drive sizes and the sheer number of files on a partition increases, NTFS's performance does not degrade. On partitions or directories with several thousands of files, FAT32 operations slow to a crawl.
Mounted drives, also known as volume mount points or drive paths, are volumes attached to an empty folder on an NTFS volume. Mounted drives function the same way as any other volume, but are assigned a label or name instead of a drive letter. Mounted drives are robust against system changes that occur when devices are added or removed from a computer. They are not subject to the 26-volume limit imposed by drive letters, so you can use them for access to more than 26 volumes on your computer.
You can use the fsutil hardlink create command to create hard links. A hard link is an NTFS-based link to a given file. When you create a hard link to a file on an NTFS volume, NTFS adds a directory entry for the hard link without duplicating the original file. You can use the same file name as the original file but appear in different folders; use different file names from the original file but appear in the same folder and use different file names from the original file and appear in different folders.
Sparse files provide a method of saving disk space for files that contain meaningful data as well as large sections of data composed of zeros. If an NTFS file is marked as sparse, then NTFS allocates disk clusters only for the data explicitly specified by the application. Non-specified ranges of the file are represented by non-allocated space on the disk. When a sparse file is read from allocated ranges, the data is returned as it was stored. Data read from non-allocated ranges is returned as zeros. An example of a program that uses sparse files is Indexing Service, which stores its catalogs as sparse files on NTFS volumes.
Finally, if you do a lot of file searching, the indexing feature greatly speeds up searches by maintaining an index of all files on a drive.
All of the above does have its impact on performance though, and it is recommended that you disable any features that are not needed if you use NTFS. If you encounter problems, remember that you will not have the comfort of being able to boot into DOS: installation of Microsoft's Recovery Console, or some other recovery software is recommended.
You can access the Recovery Console from Win2K/XP's boot menu, or selecting Repair when you boot up from the Win2K/XP CDROM.
From the above, it can be seen that NTFS is the better file system with many advantages over FAT32. In most cases where Win2K is going to be the only Operating System, it would be best to use NTFS. However, there are times when you should consider FAT32.
If you're setting up a dual-boot configuration, you should probably use FAT or FAT32.
If you're dual booting Win2K/XP and another operating system, choose a file system based on the other operating system, using the following criteria:
Format the partition as FAT if the installation partition is smaller than 2 gigabytes (GB), or if you're dual booting Win2K/XP with MS-DOS®, Windows 3.1, Windows 95, Windows 98, or Windows NT.
Use FAT32 for use on partitions that are 2 GB or larger. If you choose to format using FAT during Win2K/XP Setup and your partition is greater than 2 GB, Setup automatically formats it as FAT32.
If you're using a dual-boot configuration (using both Win2K/XP and another operating system on the same computer), you may not be able to gain access to files on NTFS partitions from the other operating system on your computer. For this reason, you should probably use FAT32 or FAT if you want a dual-boot configuration. The NTFS used by Win2K/XP is not compatible with the version used by Windows NT4. There are programmes available that will make NTFS partitions accessible under Windows 98/ME such as NTFS for Win98 and NTFSDOS Professsional Edition.http://www.winternals.com/products/fct/ntfswin98.asphttp://www.winternals.com/products/r...ntfsdospro.asp