A file system is the structure in which files are named, stored, and organized. On readable/writable disks, Microsoft® Windows® XP Professional supports the NTFS file system and three File Allocation Table (FAT) file systems: FAT12, FAT16 and FAT32. On CD-ROM and DVD media, Windows XP Professional supports two file systems: Compact Disc File System (CDFS) and Universal Disk Format (UDF).
Summarising the key features of the most common file systems:
How does a large commercial operation with a multitude of 95/98/Me/NT/2000/XP boxes function with operating systems some of which use FAT32 and some NTFS? Certainly no-one in their right mind is going to make a blanket decision to downgrade all the NT/2000/XP boxes in a business to using FAT32! No way! Not to mention all the UNIX/Linix boxes which naturally enough will not be using FAT32. Yet somehow the files are accessible all over the operation. How is this possible?
Lets leave the last word to Microsoft because, after all, if anyone knows they ought to! From the Microsoft Windows XP Inside Out (Copyright © 2001 by Microsoft Corporation, Published By Microsoft Press, A Division of Microsoft Corporation, ISBN 0-7356-1382-6), paying particular attention to the last two sentences:
"Compatibility. Windows 95/98/Me cannot recognize NTFS volumes. On multiboot systems, it’s essential that you use FAT32 for any local drives that you want to access when you boot the system using Windows 95, Windows 98, or Windows Me. Note that this restriction does not apply to network access. Assuming you’ve set up sharing properly, other network users can access your shared folders from computers running any other version of Windows, regardless of the local disk format."
The following links to Microsoft web-pages address a number of issues concerning NTFS and FAT: