NTFS by far. Better file security. That is unless you want to run 98 or ME on the same system and you need to share files between OS'es. I think it is faster too, even though I have no idea why. Maybe TTII could explain better.
The main difference between the two is in fat32 for security you can only put permissions on a folder. Where with NTFS (can only be used by NT client) It lets you go as far as to set permissions on files so if there is a spreadsheet with important employee data ss#'s ect. you can lock it so only the right people can view it as for speed I have never heard it runs faster.
I'll explain- A supervisor at a place I worked bought a dell with a p4 and win 2000. I discovered after attempting to set some file permissions (options were greyed out) I discovered dell had set it up with fat32. I converted to NTFS and it did access files faster and save faster. Maybe a coincidence, but it did.
Any one else on the file access speed thing? Was I observing a coincidence?
Allows indexing which improves file searching (mostly, faster);
Has better security -- such as file-wise encryption (not supported by WinXP home) and per-user access rules
Supports user quotas
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 Works well with large cache (greater than 96MB systems).
Is more space-efficient on large volumes (greater than 8GB).
Resistant to fragmentation.
and as JAMMAN said it is faster on all volumes over 8GB, below that and you wont benefit MUCH from the speed increase.,, the main reason for the speed increase it the way the NTFS file access is designed.
I would say you should use FAT if you have a:
A "slow" disk (less than 5400RPM) and/or controller (slower than ATA/33)
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