Here comes the age old question. NTFS or FAT32?

The answer is not simple, not simple at all.

If you are using multiple OSs on the same computer (Windows XP and Windows 9x) and you want the two OSs to read the drive, FAT32 is the only way to go.

But, if you are planning on only using Windows XP, NTFS is the way to go.

There are several reasons why NTFS is the way to go.

One of the highlights of NTFS is the protection that it provides for files.

(Note that the text below is quoted from Microsoft)
To ensure reliability of NTFS, three major areas were addressed: recoverability, removal of fatal single sector failures, and hot fixing.

NTFS is a recoverable file system because it keeps track of transactions against the file system. When a CHKDSK is performed on FAT or HPFS, 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 or HPFS, 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.

Here are some links to Microsoft Knowledge Base articles on FAT and NTFS:•Overview of FAT, HPFS, and NTFS File Systems (Q100108)•New Capabilities and Features of the NTFS 5.0 File System (Q310749)

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This informative thread was created by user sechs:
FAT vs. NTFS MiniFAQ
When "FAT" is mentioned it usually means FAT32, which most people would use. When "NTFS" is mentioned it usually refers to versions 5.0 and/or 5.1, which are used by Win2k and WinXP, respectively. Win9x refers to Win95, Win98, and WinME. A "volume" is a data (primary, logical, or dynamic) partition.

What is FAT? What is NTFS?

•FAT and NTFS are not programs or file formats; they are ways to arrange files on a disk and store information about them.•FAT stands for File Allocation Table; FAT comes in several flavours, including FAT16, VFAT, and FAT32.•NTFS stands for New Technology File System; NTFS has several versions associated with different versions of WinNT/2k/XP
•Useful Links:•Description of FAT32 (Microsoft Knowledge Base)•NTFS File System (Digit Life)•NTFS" >www.microsoft.com/hwdev/ ··· tm">NTFS Preinstallation and WinXP (Microsoft)

Which can I use? Can Win9x/2k/XP/DOS read FAT/NTFS?

•Win2k/XP format FAT32 volumes larger than ~32gb; Microsoft recommends NTFS for volumes larger than that•Win9x cannot read NTFS; NTFS for Win98 will allow Win9x to read (demo) and write (full) on NTFS volumes Winternals - Windows 98 NTFS•DOS cannot read NTFS or FAT32; NTFSDOS will allow DOS to use NTFS volumes Winternals - NTFSDOS

Will all my applications work with NTFS?

•The file systems used on volumes are irrelevant to most applications, including games; it matters for some utilities, however.

If I install with FAT/NTFS will I be able read the other file system?

•A computer can have both FAT and NTFS on it, and Win2k/XP will be able to read them both; boot/system/swap drives can have either format.

If I use NTFS will I be able to use floppies/CD-ROMS/network drives?

•Floppies are always formatted FAT in Windows; NTFSflp allows NTFS formatted floppies.•CD-ROMS are usually formatted ISO-9660 or UDF, never NTFS or FAT.• The formats of networked drives and network shares are irrelevant in sharing; your shared folders on NTFS drives can be used by Win9x systems.

Can I convert between NTFS and FAT? How do I remove NTFS?

•Win2k/XP comes with the "convert" command-line utility to go from FAT32 to NTFS; this conversion tends to give the volume greater fragmentation of system areas and non-optimal cluster sizes (original size maintained).•Windows doesn't provide for conversion from NTFS to FAT; PartitionMagic from PowerQuest will do it.•Removing NTFS partitions by formatting is explained in this Microsoft KB article Q314052

What are the advantages of FAT over NTFS?

•Performs faster on volumes ~10GB and less.•Works well with small disk cache and system cache (less than 96MB systems).

What are the disadvantages of FAT?

•Gets slower as the number of files on a partition increases.•Slows as volume size increases, because drive must constantly reference the file allocation table at the beginning of the volume.•Tends to highly fragment files.

What are the advantages of NTFS over FAT?

•Is the native file system for WinNT/2k/XP.•Allows indexing which improves file searching (mostly, faster); causes slight performance hit (can turn off).•Has better security -- such as file-wise encryption (not supported by WinXP home) and per-user access rules (you can stop your wife from seeing the porn folder!)•Supports user quotas (prevent the tykes from downloading too many mp3s)•Has file-wise compression.•Is journaled, decreasing data loss (ScanDisk at start up unnecessary).•Uses Unicode (allows foreign and extended character) file names and natively supports long file names.•Supports larger files than FAT (greater than 4GB).•Allows larger volume sizes (greater than 1TB) There is talk about a theoretical limit of 16 Exabytes, and up to 2 Terabytes.•Supported format on dynamic disks (no dynamic disks on WinXP Home).•Works well with large cache (greater than 96MB systems).•Performs better on volumes ~20GB and more.•Is more space-efficient on large volumes (greater than 8GB).•Resistant to fragmentation.

What are the disadvantages of NTFS?

•Suffers with small cache (less than 96MB systems).•Suffers with slow disks and controllers.•Is less space-efficient on small volumes (less than 4GB).

Should I use FAT or NTFS? Which is faster?

•Some people report FAT is faster than NTFS; others report that NTFS is faster than FAT. Compare your system specs and needs with the advantages and disadvantages of each file system.•Comfort level is important -- if you are apprehensive about using NTFS, then do not put your important files on it! You can always convert from FAT to NTFS later. Try NTFS on a spare partition first, if possible.

Consider FAT if you have:

•Less than 96MB of memory•A "slow" disk (less than 5400RPM) and/or controller (slower than ATA/33)•A volume of 10GB or less•A volume you want to use with a Win9x OS

Consider NTFS if you:

•Have a volume of 20GB or more•Have 128MB or more system memory•Will have a large number of files and folders (greater than 100,000 total)•Use files greater than 4GB in size•Use dynamic disks/soft RAID•Want faster file searches•Want greater file security•Want to control which files and directories users can see and use•Want to control how much disk space users can utilize•Want file compression•Want to improve data integrity•Want to use foreign/extended characters in file names

Useful Links

•FAT32 vs. NTFS FAQ (Anandtech)•FAT vs. NTFS Performance (Digit Life)•Choosing between NTFS, FAT, and FAT32 (Microsoft Win2k Server Documentation)•Should You Use NTFS? (WinPlanet Reports)•How to Create a Bootable Disk for an NTFS Partition (Microsoft Knowledge Base)•Dual Boot Links (DSLR)

Yes! The Microsoft site has a good How To for accomplishing this with step by step directions:
Multibooting with Windows XP Introduction

You can also find additional information from this Microsoft Help Forum thread: Dual Boot Windows - Links Galore

Yes!

The WinSuperSite has a fairly good one.

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IMPORTANT!
An unprotected XP machine exposed to the internet without the necessary firewall safeguards and\or security patches is at risk of infection from trojans and viruses, most notably the msblast RPC exploit. Prior to installation, one should consider disconnecting the machine from the outside world. After installation, consider installing a software firewall first or at the very least, turn on the Internet Connection Firewall (ICF) feature of XP before venturing out and be sure to make Windows Update your first stop.

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Ok, you've backed up all your data, made certain all your drivers are available and are now ready to begin installation:

•Verify your system will boot from CD, then insert CD and reboot. Your computer should automatically detect the CD, and a message "Press any key to boot CD" will be displayed. Press SPACE bar to continue.
•The installer will copy the preliminary setup files to your computer. After this completes you'll be ready to start directing the install process.
•You will be asked if you want to perform a new installation, repair an existing installation, or quit. In this case, you will be performing a new install. Press the correct key to perform a new installation.
•You will be prompted to read and accept the End User License Agreement. Press F8 to continue.
•Next, you will be prompted to choose a partition to install to. You will have the opportunity to create and/or delete partitions or just allocate the available disk space to one partition.•Choose to format the partition to either FAT32 or NTFS. You'll also see two additional choices to perform a quick format of each option, but we recommend doing a full format of either option instead. After you've determined which option is right for you, press the correct key to format the partition. Go get a cup of coffee or a soda and read the next six chapters of War and Peace. The format process will take awhile.
•When the Format process is completed, then Setup will begin. ***Note - If you are clean installing using an XP Upgrade CD you will be asked for a qualifying product at this point. Just pop the CD for your older version of Windows into the drive while the XP setup completes an authenticity check. Following this you will be prompted for the XP CD and setup will continue.
•After Setup is complete the computer will restart. Leave the XP CD in the drive but this time DO NOT press any key when the message it "Press any key to boot CD" is displayed. In 5 seconds setup will continue.
•You will be prompted to choose the region and language, followed with entering your name and organization and your product license key.
•Name the computer, and enter an Admin password. Don't forget to write down your Administrator password!!
•Enter the correct date and time.
•Choose your network settings. Leave on automatic if you use a DHCP server to assign IP addresses. If you have static IP address for broadband access, enter the settings that your ISP has provided you. Choose workgroup or domain name.
•If you are connected to the Internet, then XP will prompt you to "Activate". If you choose not to activate at this time you will be prompted periodically over the next 30 days. At the end of 30 days, if you have still not activated you will no longer be able to access the Desktop. You may want to wait until all your Hardware devices are properly installed before activating. See What is Product Activation and do I have to activate XP? for more details.
•After Activation, you will be prompted to Register the product. Note - registration is not required. See What is Product Registration and do I have to register XP? for more details.
•You have just installed Windows XP!! You will be required to enter your account password to gain access to the Windows XP Desktop.

Yes. Insert the Windows XP upgrade CD, and start Setup if necessary. When prompted, click Install Windows. At the Welcome to Windows Setup window, choose the installation type New Installation (Advanced). Click Next, and follow the instructions. Setup will prompt you to insert a valid CD containing your earlier version of Windows as proof that you qualify for the upgrade.
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That depends on several factors.

It is best to have your OS on a separate partition than the rest of your data. This results in less fragmentation and ensures speedy operation of your system.

If your hard drive is large enough, then partitioning is probably a good idea for you. Common practice is to have at least three partitions: one ~8GB for the OS, one ~10GB for Documents and other personal files, and whatever is left for programs. This setup may vary depending on how you use your system; if you do video editing for example, you may wish to have one large partition just for video.

There is no right or wrong way of partitioning as it greatly depends on how you use your system. At the bare minimum (if the drive is big enough), have one partition just for the OS and have another partition just for programs.

If you have any questions on how you should partition for your situation, do not hesitate to post in the Microsoft Forum.

Additionally, this linked MSKB article has an in depth explanation on How to Partition and Format a Hard Disk in Windows XP.

Here is a list of KB articles about Installation issues.