|I think the issue is that a FAT formatted volume can have a maximum of 512 files in the root folder. And if you have long file names (more than 8 characters + 3 characters extension) then this will be further reduced.|
Try formatting the drive as FAT32. You will lose all data on the drive so backup everything first. FAT32 would normally be preferred over NTFS on a 2GB drive.
An alternate solution would be to put the files in sub folders.