Windows 2000 supports FAT16, FAT32, and NTFS partitions.
Windows 2000 will automatically use the FAT32 file system
NTFS is standard
Fat 32
If you are installing windows XP with Windows 9x or me than the I would recommend you to use FAT32 as if you use NTFS than you wont be able to access Windows XP with NTFS partition. If you are installing Windows XP with Windows NT or Windows 2000 than you can use any partition type. But I would recommend to use NTFS.
You use My Computer & Windows Explorer to browse the file system on a drive in Windows XP.
NTFS (Compression is a feature provided by NTFS)
NT FILE SYSTEM (ntfs)
To use the utility to scan all Windows 2000/XP system files and verify them, first close all applications and then enter the command sfc /scannow in the Run dialog box. Click OK. The Windows File Protection window opens.
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.
Windows XP and Windows 7 both use the same file system by default: NTFS.
Windows 2000
For drives over 32 GB, Windows 2000 defaults to NTFS. FAT32 is also available for drives under 32 GB.