We have 3 computers on a shared network all at the moment are Windows ME but I would like to upgrade one to Windows XP will there be any problems with the sharing of folders if this occurs as I understand that XP is a NTFS system while the others are FAT.

You have the option of using either FAT32 or NTFS with XP. Give a man a fish and you feed him for a day. Teach him to fish and his wife will never forgive you.

Would that be best in this situation?

If you intend giving full read/write sharing rights across your network then possibly FAT32 would be the way to go. I don't know for certain whether in a network environment it makes any difference which filesystem is used as there is another layer of network protocols in the process. If no-one here provides a more informative answer you might get more responses in the networking forum. Give a man a fish and you feed him for a day. Teach him to fish and his wife will never forgive you.

NTFS will read FAT32, but FAT32 will not read NTFS, thats how I understand it, also I would recomend reformatting the HDD under XP, rather than upgrading to XP, do a clean install. Dont forget to update XP after install! NTFS also depends on HDD space, any over 20GIG, Ive been told that anything under that should be FAT32, but watch for other posts on that one. Hope this helps The world is full of willing people, some are willing to work, others are willing to let them; just a thought!

I don't recommend an "upgrade". Format the hard drive & do a clean install. If you install XP as FAT32, keep the partition size under 32GB Asus A7N8X-X 1800+ @8x210mhz 512mb PC3200 Ti4200/8X 128mb WDC 60GB

I dont want to lose the files that are currently on the system.