If you want to keep your data safe, yes it's important.
Convert the volume to NTFS
You can convert the entire filesystem to NTFS by running in a shell window ntfs C: or ntfs C:\
yes But conversion from NTFS to FAT32 is not possible. One has to delete the partition and recreate FAT32 partition . Data will be lost in the process.
NTFS
Windows doesn't provide any tools for converting an NTFS volume to FAT or FAT32. You will have to copy the files on the volume to another location and then format the drive. Note that FAT32 is a much more limited file system than NTFS, and there is probably no advantage to doing so on a server.
Convert a FAT volume to NTFS so that you can use encryption.
You can not convert a FAT 32 drive to NTFS in windows 98 because windows 98 does not support it. You can however mount an existing NTFS drive in windows 98 using a driver from www.winternals.com
Windows XP has a utility to convert a FAT32 system to NTFS. However, to avoid the risk of possible data loss, it is best to back up all data, format the drive with an NTFS partition, and perform a clean install. Good answer but the correct answer is by Running the Microsoft Convert utility.
Clusters!!!!!
No, it is not.
Nothing. The FAT file system simply does not support the features needed for file/folder encryption. You'll have to convert the volume to NTFS.
NTFS (Compression is a feature provided by NTFS)