The file system (disk format) that the NT family of Windows, such as NT4, 2k or XP, uses is "
NTFS", which is much more stable than the ones used by Windows 9x and ME, (FAT and FAT32.) NTFS also has many other features lacking in FAT and FAT32, such as the ability to store larger files, have larger partitions, file compression and security features. It is also a "Journaling" file system, which means it tracks changes made, which makes file corruption (such as you might get from a crash or a power outage) much less likely.
If you are running Windows 2000 or XP, you really want to have it on NTFS. However, to run games under these Operating Systems even with VDMSound, a FAT32 partition will be very useful, because some games such as "Icebreaker" have problems running from an NTFS partition. Having a FAT32 partition is a prerequisite for these games to work under Windows XP, but you do not need to boot Windows XP from the FAT32 partition, you only need to store the game files there.
Also, some games will not run correctly under Windows XP or any other NT-based version of Windows, (i.e. NT 4.0 or 2000) even with FAT32. This is not related to the file system, but about the way each game tries to control the hardware and the CPU. For these games, the ability to boot to MS-DOS or Windows 9x, (using a pure DOS bootdisk or having a dual-boot configuration with Windows 9x) may be the only option.
On a WinXP System with an NTFS partition you will need to have a FAT32 partition, if you want to have a functioning hard drive from DOS. When you boot with a DOS bootdisk, the FAT or FAT32 partitions will be seen, but the NTFS ones will not be recognized.
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