The GUI in Windows XP later OS’s allows only NTFS as the format type for external drives; not too handy when you want to transfer files both ways between a PC and a Mac, as Macs can only read (not write) NTFS partitions.
However, you can drop into a command prompt to force formatting using FAT32:
format /FS:FAT32 X:
This is good for drives up to 32GB, which is still a bit small. For drives of up to 8TB, you’ll need a partition tool such as SwissKnife, PartitionMagic or Acronis Disk Director.
Original info from here: http://www.online-tech-tips.com/computer-tips/formatting-external-hard-drive-to-fat-32/
Matthew Skelton 