|Win9x/ME doesn't use & can't use NTFS, so I don't know what you're getting at? 2000/XP can use either FAT32 or NTFS but the FAT32 format tool built into the discs does NOT support partitions larger than 32GB. This is because Microsoft wants you to use NTFS. Vista & Win7 can read/write to FAT32, but cannot be installed on it.|
When installing Win98, I boot off the Win98 boot floppy & run FDISK from the DOS prompt. I wipe out all partitions, then create at least 2 new partitions (one for Windows, one for storage). Then I go back to the DOS prompt & format. There is no format choice between FAT32 or NTFS because Win98 doesn't support NTFS. To be able to use a USB stick, the motherboard/BIOS must support USB option in the boot order. Many older boards do not support USB booting.
When installing 2000/XP/Vista/7, I prep the HDD in advance using 3rd party software such as available from the HDD manufacturer or I use UBCD. I only use FAT32 on small drives (20GB or less) because FAT32 usually performs better on smaller drives. When using FAT32 on larger drives, there's a lot of slack space (which means wasted space). NTFS has a default cluster size of 4k, the FAT32 cluster size varies depending on the size of partition, it maxes out at 32k. That means that a 1k file on NTFS takes up 4k, but the same file on FAT32 can take up to 32k. And the max file size when using FAT32 is 4GB minus 1 byte.