Once a disk partition is defined, it needs to be formatted with a file system to be used. Depending on the operating system installed, your choices include FAT, FAT32, and NTFS. For all intents and purposes, stick to FAT 32 if you’re running Windows 98/ME, and NTFS if you’re running XP. The old FAT file system supports much smaller partition sizes, and space is used very inefficiently on the disk as larger partitions are defined. For XP systems, NTFS provides the added benefit of allowing you to set security permissions on individual files and folders. If you’re planning a dual-boot system, remember that Windows 9X/ME systems do not support NTFS – stick with FAT32 if that’s the route you’re planning to take.
When creating a new partition in Windows XP, you have the option of configuring what is known as the allocation unit size. While the operating system will use the default allocation size considered optimal based on the size of the partition, this setting can also be changed.
Generally speaking, a smaller allocation unit size is better is you’re typically saving small files to disk, and a larger (usually the default) size is better when you’re saving large files. The allocation unit chosen can impact available disk space considerably. For example, if a 32K cluster size is used, saving a 1K file to disk would make the other 31K in that cluster unavailable. With a 4K cluster size, that same file would only waste 3K. As a general rule, stick with the default size that Windows suggests, although you can attempt to tweak and tune this setting according to how the partition will be used.