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NTFS is a journaling file system, designed primarily for scalability and security. FAT32 is used in Windows 98 because Windows 98 requires MS-DOS to boot, and it would have been very difficult to port MS-DOS to boot off of an NTFS partition.

Also, FAT32 has better performance on older computers and smaller hard drives. By the time Windows XP came out, computers were more powerful, and NTFS would actually perform better than FAT32 on the hard drives that were available by this time.

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