No NTFS is the only file system capable of encryption
FAT32 can be used by more operating systems then NTFS. In order to use NTFS the computer must be formatted with the NTFS file system. NTFS systems are able to read both NTFS and FAT32. FAT32 systems cannot read NTFS.
FAT32 is limited to 4 GB files. Files on NTFS can be up to 2 terabytes in size. Another advantage WIndows 2000 would have with NTFS is the support of file permissions. File permissions can stop different accounts from modifying files and folders that don't belong to them. FAT32 does not support file permissions, leaving users free to view,modify, or delete each other's files.
You can convert the entire filesystem to NTFS by running in a shell window ntfs C: or ntfs C:\
Largest file size is 4GB on FAT32. File size is virtually unlimited on NTFS.
NTFS FAT FAT32
FAT16, FAT32, and NTFS.
Windows XP natively supports FAT12, FAT16, FAT32, and NTFS. Other file systems, such as HPFS, JFS, ext2/3, and ReiserFS can be supported through an IFS (Installable File System).
NTFS (New Technology File System) FAT (File Allocation Table)
Win2K is based on the same file system called as NTFS as of NT. But Win2K can also be set up using FAT32 file system a predecessor of NTFS. NTFS allows us to use long file names and is much faster than FAT32 file system.
NTFS is the file system that windows XP uses; I know that much. NTFS can handle bigger files than FAT32. FAT32 can handle 2GB files maximum. (So I'm told)
Windows NT4 supports: FAT, NTFS (version 4) Windows 2000 supports: FAT, FAT16, FAT32, NTFS (versions 4 and 5)